FDI of German companies during globalization and deglobalization

Kling, Gerhard, Baten, Joerg and Labuske, Kirsten (2011) FDI of German companies during globalization and deglobalization. Open Economies Review, 22, (2), 247-270. (doi:10.1007/s11079-009-9122-z).


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Based on micro-level data of German companies from 1873 to 1927, we identified horizontal and vertical FDI applying a Knowledge-Capital model and analyzed individual FDI decisions. Our KC model revealed that market-driven FDI predominated; however, wage gaps and differences in human capital stimulated cost-driven FDI flows, which accounted for up to 10% of total FDI. On an individual level, large companies with high profitability conducted more FDI. Higher tariffs after WWI enhanced FDI, as companies could circumvent trade barriers – but declining openness reduced FDI. In spite of disintegration after WWI, the propensity to invest increased due to higher market concentration and firm specific investment patterns - albeit industry agglomeration effects were of minor importance.

Item Type: Article
ISSNs: 0923-7992 (print)
1573-708X (electronic)
Keywords: fdi, globalization, protection, germany
Subjects: H Social Sciences > HB Economic Theory
Divisions: University Structure - Pre August 2011 > School of Management
ePrint ID: 178423
Date Deposited: 25 Mar 2011 14:55
Last Modified: 27 Mar 2014 19:29
URI: http://eprints.soton.ac.uk/id/eprint/178423

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