Article history: Received 2 July 2012 Received in revised form 7 November 2013 Accepted 7 November 2013 Available online 22 November 2013 This paper proposes a simple multi-industry trade model with search frictions in the labor market. Unimpeded access to global financial markets enables capital owners to invest abroad, thereby fostering unemployment at the extensive industry margin. Whether a...

In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and in...

This paper develops a model of FDI with reverse imports examining the impact of FDI on the home economy through the “hollowing out” effect on the domestic employment. A foreign wage threshold exists. If the foreign wage is lower than the threshold, the home firm chooses FDI. The threshold depends on a FDI fixed cost and a demand parameter. A welfare analysis shows that another foreign wage thre...

This paper investigates the simultaneous causal relationship between investments in information and communication technology (ICT) and flows of foreign direct investment (FDI), with reference to its implications on economic growth. For the empirical analysis we use data from 23 major countries with heterogeneous economic development for the period 1976–99. Our causality test results suggest tha...

Using firm-level data on the sales and sourcing patterns of Japanese affiliates, this paper suggests that very little foreign direct investment (FDI) falls neatly into the standard bins of horizontal, vertical and export-platform FDI. Most affiliates import some intermediates and export some output, suggesting a pattern that might be called “networked FDI.” This suggests that the nature of FDI ...

The last fifteen years have seen a remarkable growth of foreign direct investments (FDI) in Central, Eastern and South-eastern European countries. This growth has led to a substantial interest by the international economics literature to empirically investigate the fundamental factors that drove FDI behaviour. The reason is twofold. First of all, FDI became an important part of the domestic eco...

For FDI to help achieve the international development goal of halving absolute poverty, two conditions have to be met. First, poor developing countries need to be attractive to foreign investors. Second, the host-country environment in which foreign investors operate must be conducive to favourable FDI effects with regard to overall investment, economic spillovers and income growth. This paper ...

Why and how firms take advantage of foreign opportunities, especially via foreign direct investment (FDI) has been much documented. China, as a major emerging market, has attracted significant flows of FDI, to become the second largest receipt. This paper briefly examines the literature on FDI and focuses on likely determinants of FDI in China. It then analyses responses from 22 firms operating...