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FDI of German companies during globalization and deglobalization

Record type: Article

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.

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Citation

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

More information

Published date: April 2011
Keywords: fdi, globalization, protection, germany

Identifiers

Local EPrints ID: 178423
URI: http://eprints.soton.ac.uk/id/eprint/178423
ISSN: 0923-7992
PURE UUID: ca9f5f8d-f6fa-49ad-a72b-0b317c235c41

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Date deposited: 25 Mar 2011 14:55
Last modified: 18 Jul 2017 12:04

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Contributors

Author: Gerhard Kling
Author: Joerg Baten
Author: Kirsten Labuske

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