Determinants and effects of foreign direct investment: evidence from German firm-level data

Buch, Claudia M.; Kleinert, Jörn; Lipponer, Alexander; Toubal, Farid

doi:10.1111/j.1468-0327.2005.00133.x

Cited by 115 publications

(116 citation statements)

References 25 publications

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“…Sweden, the larger the investment. This is opposite to findings for German firms (Buch et al 2005), but in line with the knowledge-capital model for a small open economy. Combined with the coefficient on GDP, this result suggests that Swedish firms have significant vertical motives to tap into large factor markets.…”

Section: Resultscontrasting

confidence: 56%

“…The growing empirical literature on firm heterogeneity -made possible by accessible micro data sets -has so far mainly focused on the firm's export decision. Few studies have used firm-level data to analyse the operations of multinational firms -notable exceptions being Buch et al (2005) and Görg, Mühlnen, and Nunnenkamp (2009) who use data on German firms, and Raff, Ryan, and Stähler (2012) who use data on Japanese firms.…”

Section: Introductionmentioning

confidence: 99%

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Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data

El‐Sahli

Gullstrand

Olofsdotter

2017

Applied Economics Letters

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Using Swedish firm-level data on all firms and their affiliates abroad, we investigate what observable firm and country characteristics affect the size of an affiliate in a particular destination. We employ the richness of the data to investigate the importance of destination country factors in explaining firm outward FDI activities and distinguish between the factors that affect such activities in manufacturing versus services firms as well as vertical versus horizontal investments. Our results lend support to existing theories of multinational activity of manufacturing but not services firms. We also find observable differences between vertical and horizontal manufacturing firms that are not always explained by theory. ARTICLE HISTORY

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Section: Resultscontrasting

confidence: 56%

Section: Introductionmentioning

confidence: 99%

Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data

El‐Sahli

Gullstrand

Olofsdotter

2017

Applied Economics Letters

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“…Rather, these determinants are captured through lagged endogenous variables as well as through the fixed effects. 7 Fixed effects are specified for each combination of a particular home-country sector and a particular 7 Results in Buch et al (2005) show that country-specific explanatory variables tend to become insignificant if country fixed effects are included.…”

Section: The Empirical Modelmentioning

confidence: 99%

Business Cycles and FDI: Evidence from German Sectoral Data

Buch

Lipponer

2005

Rev. World Econ.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract:Globalization has affected business cycle developments in OECD countries and has increased activities of firms across national borders. This paper analyzes whether these two developments are linked. We use a new firm-level dataset on the foreign activities of German firms to test whether foreign activities are affected by business cycle developments. We aggregate the data by the sector of the reporting firm, the sector of the foreign affiliate, and the host country. Data are annual and cover the period 1989-2002. We find that German outward FDI increases in response to positive cyclical developments abroad and in response to a depreciation of the domestic currency. Keywords:business cycles, multinational activity, FDI, panel regressions JEL-Classification: E3, F23 Non-Technical SummarySo far, theoretical and empirical literature on multinational firms has focused on the reasons for becoming a multinational, on the reasons for going into a particular country, and on the host and home country effects of multinational activity. In this paper, we add another dimension to the discussion by analyzing the influence of short-term business cycle movements on multinational activity.The starting point of our analysis is the idea that firms' activities might be linked to the business cycle either because of a financial accelerator mechanism or because of the presence of fixed costs of market entry. Since financial frictions and fixed costs of entry can be expected to vary across firms from different sectors, we construct a dataset which contains information on foreign activities of German firms at a sectoral level. Our data are annual and cover a time period of 14 years (1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002).Our study has four main findings:First, foreign activities of German firms increase in response to positive cyclical developments abroad. This effect was particularly strong in the first and second half of the 1990s. Adjustment to the cycle mainly takes place through changes in volumes rather than entry.Second, a depreciation of the euro has stimulated foreign activities as well. This effect was particularly strong in the first half of the 1990s. In the second half of the 1990s, the real exchange rate effect was weaker, possibly because of the impact of the large valuation changes on global stock markets.Third, business cycle and real exchange rate effects are especial...

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“…Kolko (2007) took a different approach by considering location patterns of pairs of industries instead of individual industries. Buch et al (2005) use the number of competing establishments located in a given host area as a proxy for agglomeration effects. Our approach closely follows Buch et al (2005).…”

Section: Collocationmentioning

confidence: 99%

“…Buch et al (2005) use the number of competing establishments located in a given host area as a proxy for agglomeration effects. Our approach closely follows Buch et al (2005). The nature of our dataset allows us to take advantage of yearly location choice trends.…”

Section: Collocationmentioning

confidence: 99%

Location Decisions of Domestic and Foreign-Affiliated Financial Advisors: Australian Evidence

Faff

Lodh²,

Pawada

2011

J Financ Serv Res

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This paper analyses the determinants of the start-up location choices for 54,064 Australian personal financial advisors, and examines these choices with respect to their foreign and institutional affiliations.The evidence presented suggests that advisors consider general socio-economic and financial demographics when first choosing the location to commence their careers. Advisors tend to locate in areas with high population, low unemployment, smaller households and more elderly persons. Competition does not deter planners from choosing a particular location. Furthermore, foreign originated start-ups ignore financial characteristics, and prefer to locate in regions in which general demographics indicate a large market size. Bank affiliated start-ups locate in more favorable locations than independent advisors, reflecting cost and informational advantages. Independent advisors demonstrate 'learning' by replicating the location choices of institutionally linked advisors in the short term.

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Determinants and effects of foreign direct investment: evidence from German firm-level data

Cited by 115 publications

References 25 publications

Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data

Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data

Business Cycles and FDI: Evidence from German Sectoral Data

Location Decisions of Domestic and Foreign-Affiliated Financial Advisors: Australian Evidence

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