The effects at home of initiating production abroad: evidence from matched French firms |
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Authors: | Alexander Hijzen Sébastien Jean Thierry Mayer |
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Institution: | (1) OECD, Paris, France and GEP, University of Nottingham, Nottingham, UK;(2) INRA, UMR 210 Economie publique, 16 rue Claude Bernard, 75231 Paris Cedex 05, France;(3) AgroParisTech, UMR 210 Economie publique, Grignon, France;(4) CEPII, Paris, France;(5) Sciences Po, CEPII and CEPR, Paris, France;; |
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Abstract: | 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. Market-seeking 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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