Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39222
Authors: 
Mattes, Anselm
Year of Publication: 
2009
Series/Report no.: 
IAW-Diskussionspapiere 59
Abstract: 
This paper analyzes the determinants and effects of firm-level FDI flows on the basis of German micro-level data. Concering the determinants of FDI, I differentiate between different target regions and motivations for FDI (market seeking/horizontal FDI versus cost reducing/vertical FDI). The main result is that most firms engage in FDI because of market access. Further, I focus on the employment effects of direct investment projects abroad. From a theoretical point of view, the effects of FDI flows on labor demand at the firm level are uncertain. Therefore, this paper analyzes this question empirically using theory-based labor demand regressions and and an econometric framework based on the generalized method of moments (GMM). As a main result I find that there is no negative effect of firm-level FDI flows on employment. Positive effects seem plausible in many specification. Further, theory and anecdotal evidence suggest that unskilled workers are acted worse than highly or medium-skilled employees. Hence, the analysis distinguishes between different skill groups. Again, I cannot find negative effects of firm-level FDI flows on any skill group.
Subjects: 
FDI
horizontal FDI
vertical FDI
labor demand
skill groups
GMM
JEL: 
F16
F23
J23
Document Type: 
Working Paper

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