Foreign Entry into U.S. Manufacturing by Takeovers and the Creation of New Firms

25 Pages Posted: 30 Aug 2002

See all articles by Robert E. Lipsey

Robert E. Lipsey

National Bureau of Economic Research (NBER) at New York (Deceased)

Zadia Feliciano

The Graduate Center, City University of New York (CUNY); National Bureau of Economic Research; Queens College, City University of New York (CUNY), Department of Economics

Date Written: August 2002

Abstract

Using U.S. Bureau of Economic Analysis data for individual foreign acquisitions and new establishments in the U.S from 1988 to 1998, and aggregate data for 1980 to 1998, we find that acquisitions and establishments of new firms tend to occur in periods of high U.S. growth and take place mainly in industries in which the investing country has some comparative advantage in exporting. New establishments are largely in industries of U.S. comparative disadvantage, and the relation of U.S. comparative advantage to takeovers is also negative, but never significant. High U.S. stock prices, industry profitability, and industry growth discourage takeovers. High U.S interest rates and high investing country growth and currency values encourage takeovers. Direct investments in acquisitions and new establishments thus tend to flow in the same direction as trade. They originate in countries with comparative advantages in particular industries and flow to industries of U.S. comparative disadvantage.

Suggested Citation

Lipsey, Robert E. and Feliciano, Zadia, Foreign Entry into U.S. Manufacturing by Takeovers and the Creation of New Firms (August 2002). NBER Working Paper No. w9122. Available at SSRN: https://ssrn.com/abstract=327148

Robert E. Lipsey (Contact Author)

National Bureau of Economic Research (NBER) at New York (Deceased)

Zadia Feliciano

The Graduate Center, City University of New York (CUNY) ( email )

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New York, NY 10016
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National Bureau of Economic Research

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Queens College, City University of New York (CUNY), Department of Economics ( email )

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718-997-5442 (Phone)

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