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65
A Review of the Empirical Literature on FDI Determinants
- National Bureau of Economic Research
, 2005
"... This paper surveys the recent burgeoning literature that empirically examines the foreign direct investment (FDI) decisions of multinational enterprises (MNEs) and the resulting aggregate location of FDI across the world. The contribution of the paper is to evaluate what we can say with relative con ..."
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Cited by 139 (0 self)
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This paper surveys the recent burgeoning literature that empirically examines the foreign direct investment (FDI) decisions of multinational enterprises (MNEs) and the resulting aggregate location of FDI across the world. The contribution of the paper is to evaluate what we can say with relative confidence about FDI as a profession, given the evidence, and what we cannot have much confidence in at this point. Suggestions are made for future research directions. (JEL F21, F23)
A Knowledge-and-Physical-Capital Model of International Trade, Foreign Direct Investment, and Foreign Affiliate Sales: Developed Countries.” Working paper,
, 2006
"... Abstract This paper addresses two important issues at the nexus of the literatures on international trade, foreign direct investment (FDI), foreign affiliate sales (FAS), and multinational enterprises (MNEs). First, the introduction of a third internationally-mobile factor (physical capital) to the ..."
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Cited by 59 (9 self)
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Abstract This paper addresses two important issues at the nexus of the literatures on international trade, foreign direct investment (FDI), foreign affiliate sales (FAS), and multinational enterprises (MNEs). First, the introduction of a third internationally-mobile factor (physical capital) to the standard 2x2x2 "knowledge-capital" model of MNEs with skilled and unskilled labor allows us to resolve fairly readily the puzzle in the modern MNE literature that foreign affiliate sales among two identical economies completely displace their international trade. Intra-industry trade and intra-industry FDI (and FAS) can coexist for national and multinational firms (with identical productivities) in identical countries. Second, the introduction also of a third country to the model suggests a formal N-country theoretical rationale for estimating gravity equations of bilateral FDI flows and FAS, in a manner consistent with estimating gravity equations for bilateral trade flows.
General-equilibrium approaches to the multinational firm: a review of the theory and evidence
, 2001
"... Beginning in the early 1980s, theoretical analyses have incorporated the multinational firm into the microeconomic, general-equilibrium theory of international trade. Recent advances indicate how vertical and horizontal multinationals arise endogenously as determined by country characteristics, incl ..."
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Cited by 36 (0 self)
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Beginning in the early 1980s, theoretical analyses have incorporated the multinational firm into the microeconomic, general-equilibrium theory of international trade. Recent advances indicate how vertical and horizontal multinationals arise endogenously as determined by country characteristics, including relative size and relative endowment differences, and trade and investment costs. Results also characterize the relationship between foreign affiliate production and international trade in goods and services. In this paper, we survey some of this recent work, and note the testable predictions generated in the theory. In the second part of the paper, we examine empirical results that relate foreign affiliate production to country characteristics and trade/investment cost factors. We also review findings from analyses of the pattern of substitutability or complementarity between trade and foreign production.
Foreign Direct Investment and Exports with Growing Demand,” Review of Economic Studies
, 2003
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How Does Investing in Cheap Labour Countries Affect Performance at Home? Firm-Level Evidence from France and Italy
- Oxford Economic Papers
, 2010
"... Transferring low tech manufacturing jobs to cheap labour countries is often seen by part of the general public and policy makers as a step into the de-industrialisation of the European economies. However, recent contributions have shown that the effects on home economies are rarely negative. Our pap ..."
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Cited by 23 (0 self)
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Transferring low tech manufacturing jobs to cheap labour countries is often seen by part of the general public and policy makers as a step into the de-industrialisation of the European economies. However, recent contributions have shown that the effects on home economies are rarely negative. Our paper contributes to this literature by examining how outward investments to developing and less developed countries (LDCs) affect home activities of French and Italian firms that turn multinational in the period analysed. The effects of these investments are also compared to the effects of investments to developed economies (DCs). The analysis is carried out by using propensity score matching. We find no evidence of a negative effect of outward investments to LDCs. In Italy they have a positive long term effect on value added and employment. For France we find a positive effect on the size of domestic output and employment.
The Impact of ISO 9000 Diffusion on Trade and FDI: A New Institutional Analysis
- The Impact of ISO 9000 Certification on the Financial Performance of Organizations. Journal of Global Business Issues
, 2008
"... Abstract: The academic literature on ISO 9000 focuses more on diffusion-drivers than on diffusion-effects. We employ panel data reported by OECD nations over the 1995-2001 period to estimate the impact of ISO adoptions on country-pair economic relations. We find ISO diffusion to have no effect in de ..."
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Cited by 18 (2 self)
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Abstract: The academic literature on ISO 9000 focuses more on diffusion-drivers than on diffusion-effects. We employ panel data reported by OECD nations over the 1995-2001 period to estimate the impact of ISO adoptions on country-pair economic relations. We find ISO diffusion to have no effect in developed nations, but to positively pull FDI (i.e., enhancing inward FDI) and positively push trade (i.e., enhancing exports) in developing nations.
Strategic Second Sourcing by Multinationals
- International Economic Review
, 2004
"... Abstract: Multinationals often serve foreign markets by producing domestically and exporting as well as by investing directly in foreign production facilities. We argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reaso ..."
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Cited by 14 (0 self)
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Abstract: Multinationals often serve foreign markets by producing domestically and exporting as well as by investing directly in foreign production facilities. We argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities--committing to a second source allows the firm to keep average cost low while at the same time increasing its marginal cost. The increase in marginal cost softens product market competition resulting in higher profits. In our model, firms can sink capacity domestically, where the constant marginal cost is known, sink capacity in the foreign country, where the constant marginal cost is uncertain, or do both. In the absence of strategic considerations, the firm usually chooses to either export or use foreign direct investment-- it rarely uses both sources of production. In contrast, price competition in the product market makes it much more likely that the firm will choose to use a second source. In fact, there are cases in which the firm sinks capacity in both locations even in the absence of cost uncertainty. We argue that this theory also has implications for the “make or buy ” literature in production management and the literature on second sourcing in industrial organization. Finally, we show that the practice of second sourcing has implications for the degree of exchange rate pass through when the uncertainty about foreign costs is driven by fluctuations in the exchange rate.
Is export promotion effective in developing countries? Firm-level evidence on the intensive and the extensive margins of exports
- Journal of International Economics
, 2008
"... How effective are export promotion activities in developing countries? What are the channels through which export promotion affects firms' exports, the intensive margin or the extensive margin? Empirical evidence in this respect is scarce. We aim at filling this gap in the literature by provid ..."
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Cited by 9 (0 self)
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How effective are export promotion activities in developing countries? What are the channels through which export promotion affects firms' exports, the intensive margin or the extensive margin? Empirical evidence in this respect is scarce. We aim at filling this gap in the literature by providing evidence on the impact of export promotion on export performance using a unique firmlevel dataset for Peru over the period [2001][2002][2003][2004][2005]. We find that export promotion actions are associated with increased exports, primarily along the extensive margin, both in terms of markets and products. This result is robust across alternative specifications and estimation methods.
The Spatial Organization of Multinational Firms ∗
"... Using six years of firm-level data covering 224 regions of the enlarged European Union, we evaluate the importance to a firm of locating its activities (production, headquarters, R&D, logistics and sales) close together. We find that, after controlling for regional characteristics, being closely ..."
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Cited by 4 (1 self)
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Using six years of firm-level data covering 224 regions of the enlarged European Union, we evaluate the importance to a firm of locating its activities (production, headquarters, R&D, logistics and sales) close together. We find that, after controlling for regional characteristics, being closely located to a previous investment positively affects firm location choice. However, the impact of distance is dependent on the type of investment (production or service). The impact dies out faster for service activities. Finally, we show that a surprisingly positive effect comes from locating a new production plant close to an existing production investment, but in another country.
Has Japan Been Left Out in the Cold by Regional Integration?
"... Aregional trading bloc (RTB) is a grouping of countries in which trade between members faces fewer restrictions (i.e., tariffs, quotas, nontariff barriers) than trade between a member ..."
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Cited by 4 (2 self)
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Aregional trading bloc (RTB) is a grouping of countries in which trade between members faces fewer restrictions (i.e., tariffs, quotas, nontariff barriers) than trade between a member
