Who Goes East? The Impact of Enlargement on the Patterns of German Fdi

IAW Discussion Paper No. 24

38 Pages Posted: 26 May 2006

See all articles by Claudia M. Buch

Claudia M. Buch

Deutsche Bundesbank

Joern Kleinert

University of Tuebingen - Department of Economics

Date Written: March 2006

Abstract

Affiliates of German firms in Eastern Europe differ from those in the rest of the world. They have smaller sales and they employ more labor. Labor productivity is thus lower than in affiliates of German firms elsewhere. Moreover, multinational activity in Eastern Europe is mostly unilaterally whereas, for industrialized countries, bilateral FDI linkages dominate. In this paper, we aim at explaining differences in the activities of German multinational firms in Eastern and Western Europe. Do German firms engage in different activities in Eastern and Western Europe, i.e. do the types of affiliates differ? Or do smaller German parent firms particularly benefit from enlargement, i.e. do characteristics of the parents differ in a systematic way?

Keywords: Eastern enlargement, foreign direct investment, firm heterogeneity

JEL Classification: F15, F23, L23

Suggested Citation

Buch, Claudia M. and Kleinert, Joern, Who Goes East? The Impact of Enlargement on the Patterns of German Fdi (March 2006). Available at SSRN: https://ssrn.com/abstract=904318 or http://dx.doi.org/10.2139/ssrn.904318

Claudia M. Buch (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Joern Kleinert

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

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