Testing the O-ring theory for FDI

Arbeitspapier

Modern production processes often involve several sequential stages which are performed in many different countries. This pattern of vertical specialization does not only affect trade between countries but it is also of importance for foreign direct investment (FDI). In this paper, we therefore adopt the idea of Kremer (1993) and Costinot et al. (2011) of a sequential production process which is subject to mistakes to the theory of FDI. Using firm-level panel data on German outward FDI, we show that the affiliate sector's position in the value chain affects the firm's FDI location choice. Affiliates in sectors that are positioned toward the end of the value chain are more likely to be located in more productive countries.

Angaben zum Objekt

• ISBN: 978-3-86558-929-3
• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Bundesbank Discussion Paper ; No. 24/2013

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Empirical Studies of Trade ; Multinational Firms; International Business
• Thema: Foreign Direct Investment ; O-Ring Theory ; Upstreamness

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Engemann, Martina ; Lindemann, Henrike
• Ereignis: Veröffentlichung
• (wer): Deutsche Bundesbank
• (wo): Frankfurt a. M.
• (wann): 2013

Weitere Informationen

• Handle: http://hdl.handle.net/10419/78228
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ