Kiel Working Papers, Kiel Institute for World Economics
No 1571:
FDI by Early Movers, Followers and Latecomers: Timing of Entry by German Firms during Transition in the Czech Republic
Henning Mühlen and Peter Nunnenkamp
Abstract: Theoretical considerations suggest that the option of
waiting under conditions of uncertainty affects the relative importance of
firm-level productivity and distance-related transaction costs as driving
forces of FDI. Yet the timing of FDI has received little attention in the
empirical literature on FDI determinants. To help close this gap we analyze
FDI decisions by German firms with and without affiliates in the Czech
Republic at different stages of transition. We find that FDI entry strongly
depends on firm productivity immediately after the political and economic
regime change, but less so with diminishing uncertainty. Likewise,
distance-related transaction costs discourage FDI by latecomers
considerably less than FDI by early movers
Keywords: multinational enterprises, firm-level productivity, distance, timing of FDI; (follow links to similar papers)
JEL-Codes: F23; (follow links to similar papers)
46 pages, November 2009
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