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The Effects at Home of Initiating Production Abroad: Evidence from Matched French Firms

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  • Alexander Hijzen
  • Sébastien Jean
  • Thierry Mayer

Abstract

Based on matching techniques in combination with a difference-in-difference estimator, this paper estimates the effects at home of initiating production abroad through the establishment of a foreign production affiliate. The analysis covers manufacturing and service firms active in France during the period 1987-1999. We show that the motivation to start producing abroad is an important determinant of its impact at home. Market-seeking FDI in manufacturing is associated with significant scale effects, resulting in job creation. By contrast, factor-seeking FDI in manufacturing has no significant effect on employment. However, there is some evidence that this type of FDI is associated with technology effects, in the form of greater capital-intensity and efficiency, as well as larger exports. Finally, FDI in service sectors is associated with significant positive employment effects, presumably reflecting the importance of the market-seeking motive in these sectors.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2009-39.

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Date of creation: Dec 2009
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Handle: RePEc:cii:cepidt:2009-39

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Keywords: FDI; MULTINATIONALS; PROPRENSITY SCORE MATCHING; SERVICES; DELOCALISATION;

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Citations

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Cited by:
  1. Fukao, Kyoji & Ito, Keiko & Kwon, Hyeog Ug & Takizawa, Miho, 2007. "Cross-Border Acquisitions and Target Firms' Performance: Evidence from Japanese Firm-Level Data," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2006-18, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  2. Kleinert, Jörn & Toubal, Farid, 2007. "The impact of locating production abroad on activities at home," Tübinger Diskussionsbeiträge 314, University of Tübingen, School of Business and Economics.
  3. EDAMURA Kazuma & Laura HERING & INUI Tomohiko & Sandra PONCET, 2011. "The Overseas Subsidiary Activities and Their Impact on the Performance of Japanese Parent Firms," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 11069, Research Institute of Economy, Trade and Industry (RIETI).
  4. Giorgio Barba Navaretti & Davide Castellani & Anne-Célia Disdier, 2006. "How Does Investing in Cheap Labour Countries Affect Performance at Home? France and Italy," Development Working Papers 215, Centro Studi Luca d\'Agliano, University of Milano.
  5. Naghavi, Alireza & Ottaviano, Gianmarco Ireo Paolo, 2006. "Offshoring and Product Innovation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6008, C.E.P.R. Discussion Papers.
  6. Ayumu Tanaka, 2012. "The Causal Effects of Exporting on Domestic Workers:A Firm-Level Analysis using Japanese Data," Discussion papers e-11-009, Graduate School of Economics Project Center, Kyoto University.
  7. Alexander HIJZEN & INUI Tomohiko & TODO Yasuyuki, 2007. "The Effects of Multinational Production on Domestic Performance: Evidence from Japanese Firms," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 07006, Research Institute of Economy, Trade and Industry (RIETI).
  8. Herzer, Dierk, 2011. "The Long-Run Relationship between Outward FDI and Total Factor Productivity: Evidence for Developing Countries," Proceedings of the German Development Economics Conference, Berlin 2011 41, Verein für Socialpolitik, Research Committee Development Economics.
  9. Hayakawa, Kazunobu, 2012. "Impacts of FTA utilization on firm performance," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 366, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  10. Alexandre Gazaniol, 2012. "The impact of outward FDI on the domestic perimeter of manufacturing groups," Working Papers DT/2012/03, DIAL (Développement, Institutions et Mondialisation).
  11. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Motohashi, Kazuyuki & Obashi, Ayako, 2013. "Two-dimensional analysis of the impact of outward FDI on performance at home: Evidence from Japanese manufacturing firms," Japan and the World Economy, Elsevier, Elsevier, vol. 27(C), pages 25-33.
  12. TANAKA Ayumu, 2012. "The Causal Effects of Exporting on Japanese Workers: A firm-level analysis," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 12017, Research Institute of Economy, Trade and Industry (RIETI).

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