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Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data

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  • Zouheir El-Sahli
  • Joakim Gullstrand
  • Karin Olofsdotter

Abstract

Using Swedish firm-level data on all firms and their affiliates abroad, we investigate what observable firm and country characteristics affect the size of an affiliate in a particular destination. We employ the richness of the data to investigate the importance of destination country factors in explaining firm outward FDI activities and distinguish between the factors that affect such activities in manufacturing versus services firms as well as vertical versus horizontal investments. Our results lend support to existing theories of multinational activity of manufacturing but not services firms. We also find observable differences between vertical and horizontal manufacturing firms that are not always explained by theory.

Suggested Citation

  • Zouheir El-Sahli & Joakim Gullstrand & Karin Olofsdotter, 2018. "Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data," Applied Economics Letters, Taylor & Francis Journals, vol. 25(17), pages 1222-1225, October.
    • Handle: RePEc:taf:apeclt:v:25:y:2018:i:17:p:1222-1225
    DOI: 10.1080/13504851.2017.1412068
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    References listed on IDEAS

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    1. Holger Görg & Henning Mühlen & Peter Nunnenkamp, 2010. "Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 65(3), pages 273-295, September.
    2. David L. Carr & James R. Markusen & Keith E. Maskus, 2021. "Estimating The Knowledge-Capital Model of the Multinational Enterprise," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 5, pages 95-110, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Thompson, Edmund R. & Dericks, Gerard H. & Fai, Felicia, 2019. "Development and validation of a firm-level vertical and horizontal internationalization metric," International Business Review, Elsevier, vol. 28(3), pages 533-543.
    2. Michael Moritz & Veronika Hecht & Patricia Noska & Johannes Schaffler, 2020. "Types of FDI and Determinants of Affiliate Size: the Classification Makes the Difference," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(4), pages 312-331, October.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General

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