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Explaining Foreign Ownership By Comparative and Competitive Advantage: Empirical Evidence

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  • Christian Bellak

    ()
    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

This paper provides empirical evidence on the determinants of foreign ownership in manufacturing industries. Foreign ownership, according to the theory of international production, is the result of the combination of comparative and competitive advantage. An adequate examination of the ownership structure of an industry requires the ability to establish empirically the extent to which international competitiveness of firms rests on comparative and competitive advantage. Analysis is based on a sample of the 30 largest manufacturing firms in Austria. The distinction and definition of comparative and competitive advantage as used in this paper and following from it the conclusions about the ownership structure are consistent with the empirical evidence about the share of employees in foreign-owned firms on the industry level. In particular, the classification of firms as foreign- or domestically-owned is in line with the revealed performance differences between foreign and domestic firms.

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Bibliographic Info

Paper provided by Vienna University of Economics, Department of Economics in its series Department of Economics Working Papers with number wuwp062.

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Date of creation: Mar 1999
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Handle: RePEc:wiw:wiwwuw:wuwp062

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Related research

Keywords: Foreign Direct Investment; Comparative Advantage; Multinational Enterprises; International Production;

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  1. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
  2. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262633078, December.
  3. Cantwell, John & Bellak, Christian, 1998. "How Important Is Foreign Direct Investment?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 99-106, February.
  4. Nakamura, M. & Xie, J., 1998. "Nonverifiability, noncontractibility and ownership determination models in foreign direct investment, with an application to foreign operations in Japan," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 16(5), pages 571-599, September.
  5. M Krishna Erramilli & Sanjeev Agarwal & Seong-Soo Kim, 1997. "Are Firm-Specific Advantages Location-Specific Too?," Journal of International Business Studies, Palgrave Macmillan, vol. 28(4), pages 735-757, December.
  6. George Norman & John Dunning, 1984. "Intra-industry foreign direct investment: Its rationale and trade effects," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 120(3), pages 522-540, September.
  7. Bruce Kogut & Udo Zander, 1993. "Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 625-645, December.
  8. Alan M Rugman & Alain Verbeke, 1998. "Multinational Enterprises and Public Policy," Journal of International Business Studies, Palgrave Macmillan, vol. 29(1), pages 115-136, March.
  9. P. Lloyd, 1998. "Globalisation and competition policies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 134(2), pages 161-185, June.
  10. Patel, Pari & Vega, Modesto, 1999. "Patterns of internationalisation of corporate technology: location vs. home country advantages1," Research Policy, Elsevier, Elsevier, vol. 28(2-3), pages 145-155, March.
  11. Leo Sleuwaegen, 1987. "Multinationals, the European Community and Belgium: Recent Developments," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 26(2), pages 255-272, December.
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Cited by:
  1. Aleksandra Riedl & Silvia Rocha-Akis, 2007. "Testing the tax competition theory: How elastic are national tax bases in western Europe?," Department of Economics Working Papers wuwp112, Vienna University of Economics, Department of Economics.
  2. Theresa Grafeneder-Weissteiner & Klaus Prettner, 2009. "Agglomeration and population aging in a two region model of exogenous growth," Department of Economics Working Papers wuwp125, Vienna University of Economics, Department of Economics.
  3. Gerlinde Fellner & Matthias Sutter, 2005. "Causes, consequences, and cures of myopic loss aversion - An experimental investigation," Bonn Econ Discussion Papers, University of Bonn, Germany bgse16_2005, University of Bonn, Germany.
  4. Özlem Onaran, 2007. "International financial markets and fragility in the Eastern Europe: "can it happen" here?," Department of Economics Working Papers wuwp108, Vienna University of Economics, Department of Economics.
  5. Engelbert Stockhammer & Paul Ramskogler, 2008. "Post Keynesian economics - how to move forward," Department of Economics Working Papers wuwp124, Vienna University of Economics, Department of Economics.
  6. Theresa Grafeneder-Weissteiner, 2010. "Demographic change, growth and agglomeration," Department of Economics Working Papers wuwp132, Vienna University of Economics, Department of Economics.
  7. Engelbert Stockhammer & Paul Ramskogler, 2007. "Uncertainty and exploitation in history," Department of Economics Working Papers wuwp104, Vienna University of Economics, Department of Economics.
  8. Annemarie Steidl & Engelbert Stockhammer, 2007. "Coming and leaving. Internal mobility in late Imperial Austria," Department of Economics Working Papers wuwp107, Vienna University of Economics, Department of Economics.
  9. Pasquale Commendatore & Ingrid Kubin & Carmelo Petraglia, 2007. "Footloose capital and productive public services," Department of Economics Working Papers wuwp111, Vienna University of Economics, Department of Economics.

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