Technology Gap, Foreign Direct Investment, and Market Structure

30 Pages Posted: 4 Mar 2008

See all articles by Spiros Bougheas

Spiros Bougheas

University of Nottingham - School of Economics

David Greenaway

University of Nottingham - School of Economics

Kittipong Jangkamolkulchai

affiliation not provided to SSRN

Richard Kneller

University of Nottingham

Date Written: January 2008

Abstract

We develop and analyze an entry model that predicts that the likelihood that foreign firms enter a country increases with the productivity gap between foreign and domestic firms. The intuition is that foreign firms locate where their competitive advantage is highest and thus enter countries where their productivity is higher relative to domestic firms. We test this model using firm level data on acquisitions of British firms by foreign firms and find results that are consistent with our model's predictions.

Keywords: Technology Gap, FDI, entry

JEL Classification: F21, F23

Suggested Citation

Bougheas, Spiros and Greenaway, David and Jangkamolkulchai, Kittipong and Kneller, Richard, Technology Gap, Foreign Direct Investment, and Market Structure (January 2008). Available at SSRN: https://ssrn.com/abstract=1101512 or http://dx.doi.org/10.2139/ssrn.1101512

Spiros Bougheas (Contact Author)

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

David Greenaway

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 951 5469 (Phone)
+44 115 951 4159 (Fax)

Kittipong Jangkamolkulchai

affiliation not provided to SSRN

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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