Location Decisions of Heterogeneous Multinational Firms

Maggie Chen and Michael Moore

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: We examine how multinational Örms with heterogeneous total factor productivity (TFP) self-select into different host countries. Both aggregate- and Örm-level estimates suggest that more productive French Örms are more likely than their less efficient competitors to invest in relatively tough host countries. Countries with a smaller market potential, higher Öxed 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 Örm and country heterogeneity and address the potential TFP endogeneity.

Keywords: multinational firm; location decision; firm heterogeneity; productivity (search for similar items in EconPapers)
JEL-codes: D24 F23 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2009
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Location decision of heterogeneous multinational firms (2010)
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:gwi:wpaper:2009-17

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