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Who Goes East? The Impact of Enlargement on the Patterns of German FDI

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  • Claudia M. Buch
  • Jörn Kleinert

Abstract

Affiliates of German firms in Eastern Europe differ from those in the rest of the world. They have smaller sales and they employ more labor. Labor productivity is thus lower than in affiliates of German firms elsewhere. Moreover, multinational activity in Eastern Europe is mostly unilaterally whereas, for industrialized countries, bilateral FDI linkages dominate. In this paper, we aim at explaining differences in the activities of German multinational firms in Eastern and Western Europe. Do German firms engage in different activities in Eastern and Western Europe, i.e. do the types of affiliates differ? Or do smaller German parent firms particularly benefit from enlargement, i.e. do characteristics of the parents differ in a systematic way?

Suggested Citation

  • Claudia M. Buch & Jörn Kleinert, 2006. "Who Goes East? The Impact of Enlargement on the Patterns of German FDI," IAW Discussion Papers 24, Institut für Angewandte Wirtschaftsforschung (IAW).
    • Handle: RePEc:iaw:iawdip:24
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    References listed on IDEAS

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    2. Buch, Claudia M. & Kleinert, Jörn & Toubal, Farid, 2003. "Where Enterprises Lead, People Follow? Links between Migration and German FDI," Kiel Working Papers 1190, Kiel Institute for the World Economy (IfW Kiel).
    3. Sascha O. Becker & Karolina Ekholm & Robert Jäckle & Marc-Andreas Muendler, 2005. "Location Choice and Employment Decisions: A Comparison of German and Swedish Multinationals," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(4), pages 693-731, December.
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    5. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2006. "Where enterprises lead, people follow? Links between migration and FDI in Germany," European Economic Review, Elsevier, vol. 50(8), pages 2017-2036, November.
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    Cited by:

    1. Michael Overesch & Georg Wamser, 2010. "The effects of company taxation in EU accession countries on German FDI1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(3), pages 429-457, July.
    2. Ki-Sik Hwang, 2008. "Sub-National Level Analysis on FDI Relocation towards Eastern Europe," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 11(1), pages 19-34, March.
    3. Robert E. Lipsey, 2006. "Measuring the Impacts of FDI in Central and Eastern Europe," NBER Working Papers 12808, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Eastern enlargement; foreign direct investment; firm heterogeneity;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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