Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic

Henning Mühlen, Holger Görg and Peter Nunnenkamp

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy (IfW Kiel)

Abstract: In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI. However, the relevance of firm and industry characteristics differs between the manufacturing and services sectors and depends on whether FDI is horizontal or vertical.

Keywords: multinational enterprises; firm heterogeneity; industry characteristics; sectorspecific FDI; vertical and horizontal FDI (search for similar items in EconPapers)
JEL-codes: F23 L20 L23 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (6)

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Journal Article: Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkie:37268

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