European Business Schools Librarian's Group

Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics

Explaining Foreign Ownership By Comparative and Competitive Advantage: Empirical Evidence

Christian Bellak ()
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Christian Bellak: Department of Economics, Vienna University of Economics & B.A.

Abstract: This paper provides empirical evidence on the determinants of foreign ownership in manufacturing industries. Foreign ownership, according to the theory of international production, is the result of the combination of comparative and competitive advantage. An adequate examination of the ownership structure of an industry requires the ability to establish empirically the extent to which international competitiveness of firms rests on comparative and competitive advantage. Analysis is based on a sample of the 30 largest manufacturing firms in Austria. The distinction and definition of comparative and competitive advantage as used in this paper and following from it the conclusions about the ownership structure are consistent with the empirical evidence about the share of employees in foreign-owned firms on the industry level. In particular, the classification of firms as foreign- or domestically-owned is in line with the revealed performance differences between foreign and domestic firms.

Keywords: Foreign Direct Investment; Comparative Advantage; Multinational Enterprises; International Production

JEL-codes: F; F23; L2; L60 March 1999

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