Kiel Working Papers, Kiel Institute for World Economics
No 1544:
Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic
Holger Görg, Henning Mühlen and Peter Nunnenkamp
Abstract: In addition to firm and industry characteristics, the
heterogeneity of foreign direct investment (FDI) has to be taken into
account when analyzing the determinants of outward FDI. We combine two
firm-specific datasets on German firms with subsidiaries and joint ventures
in the Czech Republic, compared to a control group of German firms without
FDI in this host country. The impact of firm and industry characteristics
on FDI decisions is assessed by estimating two-step Heckman models. We find
that larger, more productive and more experienced firms are more likely to
invest in the Czech Republic. Firm characteristics also affect the size of
FDI in manufacturing. The relevance of both firm and industry
characteristics critically depends on whether FDI is horizontal or
vertical
Keywords: multinational enterprises, firm heterogeneity, industry characteristics, sector-specific FDI, vertical and horizontal FDI; (follow links to similar papers)
JEL-Codes: F23,; L25; (follow links to similar papers)
23 pages, August 2009
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