Does investing abroad reduce domestic activity? Evidence from Italian manufacturing firms
AbstractThe aim of this paper is to evaluate whether domestic and foreign activities of Italian firms are mainly substitutes or complements. We take advantage of a unique firm-level panel data set from the Bank of Italy Survey of Industrial and Service Firms, which provides information on the international activity of a representative sample of Italian enterprises. We use matching methods to compare the performance of firms that become multinationals with that of firms that had considered the possibility to invest abroad, but had not yet done so. Using a different approach, we supplement the counterfactual strategy by studying the conditional over-time correlation between domestic and foreign employment of a sample of multinational firms. Both methods suggest that domestic and foreign activities are more likely to be complements than substitutes. The positive correlation between domestic and foreign employment is higher for the domestic highly-skilled workforce and for firms that have adopted complex strategies of internationalization.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 769.
Date of creation: Jul 2010
Date of revision:
foreign direct investment; multinational enterprises; matching; delocalization;
Find related papers by JEL classification:
- F2 - International Economics - - International Factor Movements and International Business
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- J0 - Labor and Demographic Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-14 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997.
"Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden,"
Working Paper Series
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- Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-97, November.
- Blomström, Magnus & Fors, Gunnar & Lipsey, Robert E., 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Working Paper Series in Economics and Finance 200, Stockholm School of Economics.
- Magnus Blomstrom & Gunnar Fors & Robert E. Lipsey, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," NBER Working Papers 6205, National Bureau of Economic Research, Inc.
- Giorgio Barba Navaretti & Davide Castellani & Anne-Célia Disdier, 2010. "How does investing in cheap labour countries affect performance at home? Firm-level evidence from France and Italy," Oxford Economic Papers, Oxford University Press, vol. 62(2), pages 234-260, April.
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