Mode, Size, and Location of Foreign Direct Investments and Industry Markups

Chung, Wilbur

doi:10.2139/ssrn.267052

Abstract

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Mode, Size, and Location of Foreign Direct Investments and Industry Markups

Wilbur Chung

University of Maryland - Robert H. Smith School of Business

Abstract:
Several studies find that inward foreign direct investment (FDI) raises host industries' competition and productivity using aggregate FDI measures: the monetary flows or the change in the industries' foreign production share. Yet FDI flows are composed of many individual, heterogeneous investments. Reflecting this heterogeneity, I ask how the average traits of the individual investments that constitute the FDI flow further affect the host. While the results show that inward FDI does heighten competition for US manufacturing industries in 1987-1991, price-cost markups fall even more when foreign investments locate further away from incumbent industry, which is consistent with endogenous location choice.

Number of Pages in PDF File: 41

Keywords: foreign direct investment, competition, location choice, entry mode

JEL Classification: F23, L11

working papers series

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Date posted: May 17, 2001

Suggested Citation

Chung, Wilbur C., Mode, Size, and Location of Foreign Direct Investments and Industry Markups. Available at SSRN: http://ssrn.com/abstract=267052 or http://dx.doi.org/10.2139/ssrn.267052

Contact Information

Wilbur C. Chung (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

HOME PAGE: http://www.rhsmith.umd.edu/faculty/wchung/