Kiel Working Papers, Kiel Institute for World Economics
No 1546:
Domestic Repercussions of Different Types of FDI: Firm-level Evidence for Taiwanese Manufacturing
Wan-Hsin LIU and Peter Nunnenkamp
Abstract: Abstract: It is widely feared that outward FDI gradually
hollows out domestic manufacturing and displaces local workers. We address
this concern by drawing on exceptionally informative firm-specific data on
Taiwanese multinationals in manufacturing. In particular, we assess whether
repercussions at home depend on the size, location and type of outward FDI.
We control for firm heterogeneity and estimate ordered probit models with
the firms’ own assessment of domestic production and employment effects as
dependent variables. We find that the probability of negative effects
increases slightly with the size of FDI. The effects of locating in China
differ from those of locating in advanced countries not only in size but
also in sign. In contrast to vertical and export-platform FDI, employment
effects of horizontal FDI tend to be positive. The quantitative impact is
typically small, however
Keywords: FDI location, type of FDI, domestic employment, home production, firm heterogeneity; (follow links to similar papers)
JEL-Codes: F23; (follow links to similar papers)
37 pages, September 2009
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