Domestic repercussions of different types of FDI: firm-level evidence for Taiwanese manufacturing

Wan-Hsin Liu () and Peter Nunnenkamp

No 1546, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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 (search for similar items in EconPapers)
JEL-codes: F23 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Domestic Repercussions of Different Types of FDI: Firm-Level Evidence for Taiwanese Manufacturing (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1546

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