General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence

Markusen, James R.; Maskus, Keith E.

doi:10.3386/w8334

Cited by 125 publications

(93 citation statements)

References 37 publications

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“…Existing FDI theory provides obvious reasons to expect that a parent country's FDI in host markets is interdependent, but little attention has been paid to the interdependence of FDI decisions by parent countries in a common host country (although if one considers competition in goods or host-country factor markets, there could well be such a link). This may be the reason why Markusen and Maskus (2001) and Blonigen et al (2003) find that the determinants of FDI activity for US inbound and outbound data yield very different estimates.…”

Section: Datamentioning

confidence: 97%

“…In this sense, it may simplify the comparisons between results on FDI motivations. As demonstrated by Markusen and Maskus (2001) and Blonigen et al (2003), these sub-samples, which include the large majority of FDI activity provide robustness. The cost of this, however, is that it assumes that the excluded countries exert no influence on FDI patterns within the remaining data.…”

Section: Datamentioning

confidence: 99%

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General equilibrium long-run determinants for Spanish FDI: a spatial panel data approach

Martínez-Martin

2011

SERIEs

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While general equilibrium theories of trade stress the role of third-country effects, little work has been done in the empirical foreign direct investment (FDI) literature to test such spatial linkages. This paper aims to provide further insights into long-run determinants of Spanish FDI by considering not only bilateral but also spatially weighted third-country determinants. The few studies carried out so far have focused on FDI flows in a limited number of countries. However, Spanish FDI outflows have risen dramatically since 1995 and today account for a substantial part of global FDI. Therefore, we estimate recently developed spatial panel data models by maximum likelihood (ML) procedures for Spanish outflows (1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002)(2003)(2004) to top-50 host countries. After controlling for unobservable effects, we find that spatial interdependence matters and provide evidence consistent with new economic geography theories of agglomeration, mainly due to complex (vertical) FDI motivations. Spatial error models estimations also provide illuminating results regarding the transmission mechanism of shocks.

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Section: Datamentioning

confidence: 97%

Section: Datamentioning

confidence: 99%

General equilibrium long-run determinants for Spanish FDI: a spatial panel data approach

Martínez-Martin

2011

SERIEs

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“…In a recent review of theoretical and empirical works on international investment flows, Markusen and Maskus (2001) conclude that most FDI's are of the horizontal type and occur between similar countries 24 . This is consistent with Brainard (1997) who shows how overseas production by multinationals increases relative to exports the higher transport costs and trade barriers.…”

Section: Methodology and Datamentioning

confidence: 99%

Common currencies and FDI flows

Schiavo¹

2007

Oxford Economic Papers

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The paper investigates the impact of EMU on foreign direct investment flows. Using the option value approach to investment decisions, it is possible to show how exchange rate uncertainty hinders cross-border investment flows. By permanently fixing bilateral exchange rates, a currency union can then be expected to spur international investment. Results from a gravity model on a sample of OECD countries confirm the hypothesis that currency unions have a positive impact on FDI; moreover, adopting the same currency appears to do more than merely eliminating exchange rate volatility. These findings closely resemble those recently obtained in the trade literature. JEL Codes: F15, F21. Terms of use: Documents in EconStor may

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“…In addition, the knowledgecapital model (see e.g. Markusen and Maskus 2001) shows that the benefits from fragmentation inherent to vertical investment derives from the cost savings associated with the exploitation of factor price differences across countries . For a high-income country like France, low-income countries are naturally the most attractive in the context of such strategies, whereby the low-skill intensive production stages are carried out by the foreign affiliate.…”

Section: Set-upmentioning

confidence: 99%

The effects at home of initiating production abroad: evidence from matched French firms

2011

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Based on matching techniques in combination with a difference-in-difference estimator, this paper estimates the effects at home of initiating production abroad through the establishment of a foreign production affiliate. The analysis covers manufacturing and service firms active in France during the period 1987-1999. We show that the motivation to start producing abroad is an important determinant of its impact at home. Marketseeking foreign direct investment (FDI) in manufacturing is associated with significant scale effects, resulting in job creation. By contrast, factor-seeking FDI in manufacturing has no significant effect on employment. However, there is some evidence that this type of FDI is associated with technology effects, in the form of greater capital-intensity and efficiency, as well as larger exports. Finally, FDI in service sectors is associated with significant positive employment effects, presumably reflecting the importance of the market-seeking motive in these sectors.

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General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence

Cited by 125 publications

References 37 publications

General equilibrium long-run determinants for Spanish FDI: a spatial panel data approach

General equilibrium long-run determinants for Spanish FDI: a spatial panel data approach

Common currencies and FDI flows

The effects at home of initiating production abroad: evidence from matched French firms

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