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), pp. 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
Digital Object Identifier (DOI): doi:10.1007/s11079-009-9122-z
ISSNs: 0923-7992 (print)
Keywords: fdi, globalization, protection, germany
ePrint ID: 178423
Date :
Date Event
April 2011Published
Date Deposited: 25 Mar 2011 14:55
Last Modified: 18 Apr 2017 02:37
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/178423

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