Download This PaperTechnology Gap, Foreign Direct Investment, and Market Structure
30 Pages Posted: 4 Mar 2008
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: 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
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