Location decision of heterogeneous multinational firms

Maggie Chen and Michael Moore

Journal of International Economics, 2010, vol. 80, issue 2, 188-199

Abstract: We examine how multinational firms with heterogeneous total factor productivity (TFP) self-select into different host countries. Both aggregate- and firm-level estimates suggest that more productive French firms are more likely than their less efficient competitors to invest in relatively tough host countries. Countries with a smaller market potential, higher fixed costs of investment or lower import tariffs tend to have higher cutoff productivities and attract a greater proportion of productive multinationals. This self-selection mechanism remains largely robust when we control for unobserved firm and country heterogeneity and address potential TFP endogeneity.

Keywords: Multinational; firm; Location; decision; Firm; heterogeneity; Productivity (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (138)

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Related works:
Working Paper: Location Decisions of Heterogeneous Multinational Firms (2009)
Working Paper: Location decision of heterogeneous multinational firms (2009)
Working Paper: Location Decisions of Heterogeneous Multinational Firms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:80:y:2010:i:2:p:188-199

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