FDI direction, FDI margin, and heterogeneous firms: evidence from the EU

Valeria Gattai and Giorgia Sali

International Review of Applied Economics, 2018, vol. 32, issue 3, 283-307

Abstract: This paper takes a firm-level perspective to analyze foreign direct investment (FDI) in the European Union (EU). Our data rely on the global company database Orbis and allow the introduction of an original definition of FDI that accounts for the FDI direction – inward vs. outward – and the FDI margin – extensive vs. intensive. Based on the available information, we ask two questions. First, how deep is the FDI involvement of European enterprises? Second, is there any systematic relationship between FDI involvement and firm-level performance? To answer these questions, we adopt an empirical methodology consisting of descriptive statistics and econometric regressions (Probit, Bivariate Probit, and Poisson models). Concerning the depth of FDI involvement, our descriptive statistics reveal that the number of firms involved in inward/outward FDI is quite notable. However, firms’ actual involvement is rather low, meaning that FDI involvement in the EU is widespread, but not deep. Concerning the relationship between FDI involvement and firm-level performance, our econometric regressions show that better enterprises experience some inward/outward FDI rather than none. Moreover, the deeper the FDI involvement, the wider is the gap with domestic firms. This suggests that performance differentials are related to both the extensive and intensive margins of both inward and outward FDI.

Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/02692171.2017.1342777 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:irapec:v:32:y:2018:i:3:p:283-307

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CIRA20

DOI: 10.1080/02692171.2017.1342777

Access Statistics for this article

International Review of Applied Economics is currently edited by Professor Malcolm Sawyer

More articles in International Review of Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().