FDI by early movers, followers and latecomers: timing of entry by German firms during transition in the Czech Republic

Henning Mühlen and Peter Nunnenkamp

No 1571, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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 (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 (1)

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Related works:
Journal Article: FDI by early movers, followers and latecomers: timing of entry by German firms during transition in the Czech Republic (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1571

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