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Christian-Albrechts-Universität zu Kiel

Institut für Volkswirtschaftslehre - Department of Economics
Economics Working Papers

Economics Working Papers: Abstract 2007-22


Nummer

2007-22

Autoren

Horst Raff, Michael J. Ryan

 

Titel

 

Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects
Abstract This paper uses a proportional hazard model to study foreign direct investment by Japanese manufacturers in Europe between 1970 and 1994. We divide each firm’s investment total into a sequence of individual investment decisions and analyze how firm-specific characteristics affect each decision. We find that total factor productivity is a significant determinant of a firm’s initial and subsequent investments. Parent-firm size does not have a significant influence on the initial decision to invest. Large firms simply have more investments than smaller firms. Other firm-specific characteristics, such as the R&D intensity, export share and keiretsu membership, also play a role in the investment process.

Keywords: Foreign direct investment, productivity, hazard model, Japan, keiretsu

JEL classification: F23, L20

 

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