Ownership, Capital or Outsourcing: What Drives German Investment to Eastern Europe?
AbstractThe paper takes a first look at the host and home country effects of German FDI in Eastern Europe (EE) based on new survey data of 1050 investment projects in EE by 420 German multinationals during the 1990s. We find that German investors transfer a substantial amount of financial capital to EE. Furthermore, the most dynamic and innovative segment of the German economy invests in the East which explains why single owned firms dominate as the form of control. We also find strong evidence of vertical FDI suggesting that German cororations are outsourcing a substantial share of their production to EE affiliates to exploit lower wages in the East.
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Bibliographic InfoPaper provided by University of Munich, Department of Economics in its series Discussion Papers in Economics with number 72.
Date of creation: May 2002
Date of revision:
capital flows ; vertical vs. horizontal FDI ; corporate governance ; globalization ; Eastern Enlargement;
Other versions of this item:
- Lorentowicz, Andzelika & Marin, Dalia & Raubold, Alexander, 2002. "Ownership, Capital or Outsourcing: What Drives German Investment to Eastern Europe?," CEPR Discussion Papers 3515, C.E.P.R. Discussion Papers.
- F15 - International Economics - - Trade - - - Economic Integration
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-07-29 (All new papers)
- NEP-CFN-2003-07-29 (Corporate Finance)
- NEP-EEC-2003-07-29 (European Economics)
- NEP-IFN-2003-07-29 (International Finance)
- NEP-TRA-2003-07-29 (Transition Economics)
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