Service characteristics and the choice between exports and FDI: Evidence from Belgian firms

Abstract

The purpose of these working papers is to promote the circulation of research results (Research Series) and analytical studies (Documents Series) made within the National Bank of Belgium or presented by external economists in seminars, conferences and conventions organised by the Bank. The aim is therefore to provide a platform for discussion. The opinions expressed are strictly those of the authors and do not necessarily reflect the views of the National Bank of Belgium.

The Dynamic effects of Foreign Direct Investment Services and Energy Consumption on Information and Communication Technology Sector

“…They concluded direct effect of vertical foreign direct investment towards exports, indirect effects by horizontal foreign direct investment. Bhalla (1995); Popovici (2018); Shabbir et al (2023); Sass et al (2018); Lall (2000); Liu et al, 2023;Sikandar et al, 2023;Sharma and Kaur (2013); Okechukwu et al (2018); Parida and Sahoo (2007); and Sleuwaegen and Smith (2021) in their study highlight the role foreign direct investment for the up gradation of low value added exports (primary or labour-intensive) into higher value added exports. They further recommend, developing countries should make policies for attracting foreign direct investment in order to get benefit from foreign direct investment spillover effects.…”

Exports, trade costs and FDI entry: evidence from Japanese firms

“…Ding et al (2021) highlight a reverse link using Chinese firm-level data: that firms' export performance is better in destination countries where these firms previously engaged in FDI. Sleuwaegen and Smith (2021) examine what characteristics of Belgian producers of services determine their internationalization mode: FDI versus exports. They find that older, larger, and more productive and more human capital-intensive Belgian service producers are more likely to serve foreign markets through FDI rather than exports.…”

Exports and Foreign Direct Investment: Theory and Evidence for Services Firms *

“…6 Our results are also somewhat different. Notably Sleuwaegen and Smith (2021) find that multinationals are larger and more productive than exporters and products with a low score on generality or a high score on search good are more often sold through affiliates. The score on credence goods is not statistically significant in their regressions.…”

“…The empirical paper that comes closest to ours is Sleuwaegen and Smith (2021) which studies firm level data from Belgium. Like our paper it focuses on the characteristics of services as an important driver of the export versus FDI decision.…”