IDEAS home Printed from https://ideas.repec.org/p/zbw/bubdp1/4206.html
   My bibliography  Save this paper

Determinants of German FDI: New Evidence from Micro-Data

Author

Listed:
  • Toubal, Farid
  • Kleinert, Jörn
  • Buch, Claudia M.

Abstract

This paper provides new evidence on the foreign direct investment stocks of German firms. We use firm-level data for the years 1990-2000 to describe the regional and sectoral patterns of German FDI through gravity-type equations. We provide evidence on the patterns of FDI by sector, by size of the foreign affiliate, and by the number of affiliates per host country. While market size and geographic distance have a significant impact on FDI stocks, we also find differences in the determinants of FDI between sectors as well as between the size of foreign affiliates and the number of foreign affiliates.

Suggested Citation

  • Toubal, Farid & Kleinert, Jörn & Buch, Claudia M., 2003. "Determinants of German FDI: New Evidence from Micro-Data," Discussion Paper Series 1: Economic Studies 2003,09, Deutsche Bundesbank.
    • Handle: RePEc:zbw:bubdp1:4206
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/19597/1/200309dkp.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raff, Horst & Srinivasan, Krishna, 1998. "Tax incentives for import-substituting foreign investment:: Does signaling play a role?," Journal of Public Economics, Elsevier, vol. 67(2), pages 167-193, February.
    2. Claudia M. Buch, 2005. "Distance and International Banking," Review of International Economics, Wiley Blackwell, vol. 13(4), pages 787-804, September.
    3. David L. Carr & James R. Markusen & Keith E. Maskus, 2021. "Estimating The Knowledge-Capital Model of the Multinational Enterprise," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 5, pages 95-110, World Scientific Publishing Co. Pte. Ltd..
    4. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," NBER Working Papers 9439, National Bureau of Economic Research, Inc.
    5. repec:bla:reviec:v:9:y:2001:i:1:p:108-22 is not listed on IDEAS
    6. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394, Elsevier.
    7. Egger, Peter, 2004. "On the Problem of Endogenous Unobserved Effects in the Estimation of Gravity Models," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 19, pages 182-191.
    8. James R. Markusen & Anthony J. Venables, 2021. "Multinational firms and the new trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 3, pages 47-67, World Scientific Publishing Co. Pte. Ltd..
    9. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    10. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
    11. Jö Kleinert, 2001. "The Time Pattern of the Internationalization of Production," German Economic Review, Verein für Socialpolitik, vol. 2(1), pages 79-98, February.
    12. John H. Dunning, 1977. "Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach," Palgrave Macmillan Books, in: Bertil Ohlin & Per-Ove Hesselborn & Per Magnus Wijkman (ed.), The International Allocation of Economic Activity, chapter 12, pages 395-418, Palgrave Macmillan.
    13. Robert E. Lipsey, 1999. "The Location and Characteristics of U.S. Affiliates in Asia," NBER Working Papers 6876, National Bureau of Economic Research, Inc.
    14. Andersson, Thomas & Fredriksson, Torbjorn, 2000. "Distinction between intermediate and finished products in intra-firm trade," International Journal of Industrial Organization, Elsevier, vol. 18(5), pages 773-792, July.
    15. Keith Head & John Ries, 2001. "Overseas Investment and Firm Exports," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 108-122, February.
    16. Raff, Horst & Kim, Young-Han, 1999. "Optimal export policy in the presence of informational barriers to entry and imperfect competition," Journal of International Economics, Elsevier, vol. 49(1), pages 99-123, October.
    17. Ignatius J. Horstmann & James R. Markusen, 2021. "Endogenous market structures in international trade (natura facit saltum)," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 2, pages 25-45, World Scientific Publishing Co. Pte. Ltd..
    18. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
    19. Barrell, Ray & Pain, Nigel, 1996. "An Econometric Analysis of U.S. Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 200-207, May.
    20. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    21. Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Buch, Claudia M. & Kleinert, Jorn & Toubal, Farid, 2004. "The distance puzzle: on the interpretation of the distance coefficient in gravity equations," Economics Letters, Elsevier, vol. 83(3), pages 293-298, June.
    2. Mariam Camarero & Laura Montolio & Cecilio Tamarit, 2020. "Understanding German FDI in Latin America and Asia: A Comparison of GLM Estimators," Economies, MDPI, vol. 8(1), pages 1-18, March.
    3. Dimitris Giakoulas & Constantina Kottaridi, 2020. "Internationalization Strategies of the Greek MNEs during the Pre-Crisis Period: An Econometric Research Based on the OLI Model," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 70(1-2), pages 128-150, January-J.
    4. Idrisova, Vittoria (Идрисова, Виттория), 2017. "Determinants of Value-Added Exports: The Role of Import Demand Factors [Детерминанты Экспорта Добавленной Стоимости: Роль Факторов Спроса На Импорт]," Working Papers 051715, Russian Presidential Academy of National Economy and Public Administration.
    5. repec:wsr:wpaper:y:2011:i:076 is not listed on IDEAS
    6. Schäffler, Johannes & Hecht, Veronika & Moritz, Michael, 2014. "Regional determinants of German FDI in the Czech Republic : evidence from a gravity model approach," IAB-Discussion Paper 201403, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Mariam Camarero & Laura Montolio & Cecilio Tamarit, 2019. "Determinants of German outward FDI: variable selection using Bayesian statistical," Working Papers 1906, Department of Applied Economics II, Universidad de Valencia.
    8. Claudia M. Buch & Farid Toubal, 2003. "Economic Integration and FDI in Transition Economies: What Can We Learn from German Data?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(4), pages 594-610.
    9. Michael Moritz & Johannes Schaeffler, 2012. "Regional Distribution of German-Czech Multinationals on the Domestic Market," ERSA conference papers ersa12p519, European Regional Science Association.
    10. Antonakakis, Nikolaos & Tondl, Gabriele, 2012. "Do determinants of FDI to developing countries differ among OECD investors? Insights from Bayesian model averaging," Discussion Papers 1/12, Europa-Kolleg Hamburg, Institute for European Integration.
    11. Ellingsen, Gaute & Likumahuwa, Winfried & Nunnenkamp, Peter, 2006. "Outward FDI by Singapore: a different animal?," Open Access Publications from Kiel Institute for the World Economy 3947, Kiel Institute for the World Economy (IfW Kiel).
    12. Nunnenkamp, Peter, 2004. "The German automobile industry and Central Europe's integration into the international division of labour: foreign production, intra-industry trade, and labour market repercussions," Open Access Publications from Kiel Institute for the World Economy 4318, Kiel Institute for the World Economy (IfW Kiel).
    13. Farid Toubal, 2004. "Localisation des firmes multinationales allemandes dans les Pays d'Europe de l'Est," Economie & Prévision, La Documentation Française, vol. 163(2), pages 75-86.
    14. Mariam Camarero & Laura Montolio & Cecilio Tamarit, 2019. "Alternative Estimators For The Fdi Gravity Model: An Application To German Outward Fdi," Working Papers 1907, Department of Applied Economics II, Universidad de Valencia.
    15. Marián Dinga & Vilma Dingová, 2011. "Currency Union and Investment Flows: Estimating the Euro Effect on FDI," Working Papers IES 2011/25, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2011.
    16. Schmeiser, Katherine N., 2013. "The firm export and FDI choice in the context of gravity," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 592-596.
    17. Schmeiser, Katherine N. & Ricaurte, Miguel F., 2012. "Tradability and market penetration costs: Explaining foreign market servicing intensities," International Review of Economics & Finance, Elsevier, vol. 22(1), pages 190-200.
    18. Constantina Kottaridi, 2005. "The 'core-periphery' pattern of FDI-led growth and production structure in the EU," Applied Economics, Taylor & Francis Journals, vol. 37(1), pages 99-113.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Claudia M. Buch & Farid Toubal, 2003. "Economic Integration and FDI in Transition Economies: What Can We Learn from German Data?," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(4), pages 594-610.
    2. Brooks, Douglas H. & Roland-Holst, David & Zhai, Fan, 2008. "Behavioral and empirical perspectives on FDI: International capital allocation across Asia," Journal of Asian Economics, Elsevier, vol. 19(1), pages 40-52, February.
    3. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
    4. Salvador Barrios & Holger Görg & Eric Strobl, 2003. "Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis," Open Economies Review, Springer, vol. 14(4), pages 397-418, October.
    5. Sivakumar, P. & Patnaik, K. Uma Shankar, 2005. "Economic Reforms and Technical Efficiency Performance in Indian Manufacturing Sector," Conference papers 331420, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    7. Rosa Forte, 2004. "The relationship between foreign direct investment and international trade. Substitution or complementarity? A survey," FEP Working Papers 140, Universidade do Porto, Faculdade de Economia do Porto.
    8. Erdey, László, 2004. "A működőtőke-áramlás a telephelyválasztás elméletének tükrében [The flow of operating capital in the light of the theory of location choice]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 472-494.
    9. Isabel Faeth, 2009. "Determinants Of Foreign Direct Investment – A Tale Of Nine Theoretical Models," Journal of Economic Surveys, Wiley Blackwell, vol. 23(1), pages 165-196, February.
    10. Norback, Pehr-Johan, 2001. "Multinational firms, technology and location," Journal of International Economics, Elsevier, vol. 54(2), pages 449-469, August.
    11. Smith, Pamela J., 2001. "How do foreign patent rights affect U.S. exports, affiliate sales, and licenses?," Journal of International Economics, Elsevier, vol. 55(2), pages 411-439, December.
    12. Carstensen, Kai & Toubal, Farid, 2004. "Foreign direct investment in Central and Eastern European countries: a dynamic panel analysis," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 3-22, March.
    13. Gianmarco I.P. Ottaviano & Alessandro Turrini, 2002. "Distance and FDI when Contracts are Incomplete," Development Working Papers 165, Centro Studi Luca d'Agliano, University of Milano.
    14. Francois, Joseph & Christen, Elisabeth, 2010. "Modes of Delivery in Services," CEPR Discussion Papers 7912, C.E.P.R. Discussion Papers.
    15. Manuela Magalhães & Ana Paula Africano, 2007. "A Panel Analysis of the FDI Impact on International Trade," FEP Working Papers 235, Universidade do Porto, Faculdade de Economia do Porto.
    16. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2001. "Expansion Strategies of U.S. Multinational Firms," BEA Papers 0012, Bureau of Economic Analysis.
    17. Ana Paula Africano & Manuela Magalhaes, 2005. "FDI and Trade in Portugal: a gravity analysis," FEP Working Papers 174, Universidade do Porto, Faculdade de Economia do Porto.
    18. Giovanni Peri & Dieter Urban, 2002. "The Veblen-Gerschenkron Effect of FDI in Mezzogiorno and East Germany," Development Working Papers 164, Centro Studi Luca d'Agliano, University of Milano.
    19. Fung , K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and central and eastern European countries : regional networks, global supply chain, or international competitors?," Policy Research Working Paper Series 4689, The World Bank.
    20. María C. Latorre, 2009. "The economic analysis of multinationals and foreign direct investment: a review," Hacienda Pública Española / Review of Public Economics, IEF, vol. 191(4), pages 97-126, December.

    More about this item

    Keywords

    distance coefficients; gravity equations; foreign direct investment;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:bubdp1:4206. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/dbbgvde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.