Mode, Size, and Location of Foreign Direct Investments and Industry Markups
University of Maryland - Robert H. Smith School of Business
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, L11working papers series
Date posted: May 17, 2001
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.344 seconds