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Domestic Repercussions of Different Types of FDI: Firm-level Evidence for Taiwanese Manufacturing

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  • Wan-Hsin LIU
  • Peter Nunnenkamp

Abstract

Abstract: It is widely feared that outward FDI gradually hollows out domestic manufacturing and displaces local workers. We address this concern by drawing on exceptionally informative firm-specific data on Taiwanese multinationals in manufacturing. In particular, we assess whether repercussions at home depend on the size, location and type of outward FDI. We control for firm heterogeneity and estimate ordered probit models with the firms’ own assessment of domestic production and employment effects as dependent variables. We find that the probability of negative effects increases slightly with the size of FDI. The effects of locating in China differ from those of locating in advanced countries not only in size but also in sign. In contrast to vertical and export-platform FDI, employment effects of horizontal FDI tend to be positive. The quantitative impact is typically small, however

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1546.

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Length: 37 pages
Date of creation: Sep 2009
Date of revision:
Handle: RePEc:kie:kieliw:1546

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Keywords: FDI location; type of FDI; domestic employment; home production; firm heterogeneity;

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Citations

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Cited by:
  1. Sosa Andrés, Maximiliano & Nunnenkamp, Peter & Busse, Matthias, 2012. "What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows," Economics Discussion Papers 2012-52, Kiel Institute for the World Economy.
  2. Peter Nunnenkamp & Maximiliano Sosa Andrés & Krishna Chaitanya Vadlamannati & Andreas Waldkirch, 2012. "What Drives India’s Outward FDI?," Kiel Working Papers 1800, Kiel Institute for the World Economy.
  3. Konstantin M. Wacker & Krishna Chaitanya Vadlamannati, 2011. "Do Multinationals Influence Labor Standards? A Close Look at US Outward FDI," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 98, Courant Research Centre PEG.
  4. United Nations ESCAP, 2012. "Foreign Direct Investment," STUDIES IN TRADE AND INVESTMENT, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in: Asia-Pacific Trade and Investment Report 2012: Recent Trends and Developments, chapter 3, pages 47-67 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

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