Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects
Christian-Albrechts-Universitaet zu Kiel; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Kiel Institute for the World Economy
Michael John Ryan
Western Michigan University - Department of Economics
CESifo Working Paper Series No. 1874
This paper uses a proportional hazard model to study foreign direct investment by Japanese manufacturers in Europe between 1970 and 1994. We divide each firm's investment total into a sequence of individual investment decisions and analyze how firm-specific characteristics affect each decision. We find that total factor productivity is a significant determinant of a firm's initial and subsequent investments. Parent-firm size does not have a significant influence on the initial decision to invest. Large firms simply have more investments than smaller firms. Other firm-specific characteristics, such as the R&D intensity, export share and keiretsu membership, also play a role in the investment process.
Number of Pages in PDF File: 41
Keywords: foreign direct investment, productivity, hazard model, Japan, keiretsu
JEL Classification: F23, L20working papers series
Date posted: January 12, 2007
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