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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. FDI in the services sector is associated with significant positive employment effects, which may reflect the possibility that FDI in this sector is predominantly motivated by market access.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/24.

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Handle: RePEc:not:notgep:09/24

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Keywords: FDI; multinationals; propensity score matching; services; delocalisation;

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Citations

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Cited by:
  1. Tanaka, Ayumu, 2013. "The causal effects of exporting on domestic workers: A firm-level analysis using Japanese data," Japan and the World Economy, Elsevier, Elsevier, vol. 28(C), pages 13-23.
  2. 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).
  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. 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.
  5. Dierk Herzer, 2010. "The Long-Run Relationship between Outward FDI and Total Factor Productivity: Evidence for Developing Countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 199, Ibero-America Institute for Economic Research.
  6. Ayako Obashi & Kazunobu Hayakawa & Toshiyuki Matsuura & Kazuyuki Motohashi, 2010. "A Two-dimensional Analysis of the Impact of Outward FDI on Performance at Home: Evidence from Japanese Manufacturing Firms," Keio/Kyoto Joint Global COE Discussion Paper Series, Keio/Kyoto Joint Global COE Program 2010-005, Keio/Kyoto Joint Global COE Program.
  7. Alexandre Gazaniol, 2012. "The impact of outward FDI on the domestic perimeter of manufacturing groups," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2012/03, DIAL (Développement, Institutions et Mondialisation).
  8. 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).
  9. 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, Centro Studi Luca d\'Agliano, University of Milano 215, Centro Studi Luca d\'Agliano, University of Milano.
  10. 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).
  11. 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.
  12. Kleinert, Jörn & Toubal, Farid, 2007. "The impact of locating production abroad on activities at home," Tübinger Diskussionsbeiträge, University of Tübingen, School of Business and Economics 314, University of Tübingen, School of Business and Economics.

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