EconPapers    
Economics at your fingertips  
 

Similarity in Demand Structures and Foreign Direct Investment in the Food and Beverage Industry

Sandro Steinbach

No 235906, 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: I study the relationship between demand similarity and foreign direct investment in the food and beverage industry. My regression specification includes a measure of similarity in income per capita to proxy for similarity in demand. Using firm-level greenfield investment data, I find a significant effect of income similarity along the intensive and extensive margin of foreign direct investment. My findings show that investment activities are more intense between countries with similar income per capita. The similarity effect is larger for the intensive margin, implying that it is not only more likely that an investment is realized between countries with similar income per capita, but also that such a project involves a considerable larger investment and creates more jobs. Although I find evidence for heterogeneity in the similarity effect, all coefficient estimates have a negative sign. Moreover, distinguishing between types of foreign direct investment, I find that the similarity effect is mainly relevant for manufacturing projects. These results show that demand for quality is an important determinant of cross-border investment activities in the food and beverage industry.

Keywords: Greenfield foreign direct investment; food and beverage industry; demand similarity; Industrial Organization; International Relations/Trade; F14; F23; L66 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ppm
Date: 2016-05
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://purl.umn.edu/235906 (application/pdf)

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:ags:aaea16:235906

Access Statistics for this paper

More papers in 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts from Agricultural and Applied Economics Association Contact information at EDIRC.
Series data maintained by AgEcon Search ().

 
Page updated 2017-09-29
Handle: RePEc:ags:aaea16:235906