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Foreign Entry Into U.S. Service Industry By Takeovers And The Creation Of New Firms

Author

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  • Zadia M. Feliciano
  • Jing Sun

Abstract

type="main" xml:id="coep12121-abs-0001"> We study the relation between foreign entry in U.S. service sector industries and the revealed comparative advantage of the investing country using U.S. Bureau of Economic Analysis firm-level data on all foreign takeovers and new foreign-owned firms from 1998 to 2008. We find foreign acquisitions in the service sector are in industries of U.S. comparative advantage while new foreign firms are in industries of investing country's comparative advantage. This suggests that foreign acquisitions in the service sector are not directly related to foreign investors' competitiveness in the industry of investment. In contrast foreign investors in new service sector firms come from countries with a competitive edge in the industries of investment. We also find that foreign investors of new service sector firms are from Organization for Economic Co-operation and Development (OECD) countries with a comparative disadvantage in royalties and trademarks. ( JEL F21, F23, G34)

Suggested Citation

  • Zadia M. Feliciano & Jing Sun, 2016. "Foreign Entry Into U.S. Service Industry By Takeovers And The Creation Of New Firms," Contemporary Economic Policy, Western Economic Association International, vol. 34(3), pages 500-512, July.
    • Handle: RePEc:bla:coecpo:v:34:y:2016:i:3:p:500-512
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    File URL: http://hdl.handle.net/10.1111/coep.2016.34.issue-3
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    Cited by:

    1. Blonigen, Bruce A. & Cristea, Anca & Lee, Donghyun, 2020. "Evidence for the effect of monitoring costs on foreign direct investment," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 601-617.
    2. Bruce A. Blonigen & Donghyun Lee, 2016. "Heterogeneous Frictional Costs Across Industries in Cross-border Mergers and Acquisitions," NBER Working Papers 22546, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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