IDEAS home Printed from https://ideas.repec.org/a/cje/issued/v43y2010i1p180-203.html
   My bibliography  Save this article

Does FDI in manufacturing cause FDI in business services? Evidence from French firm-level data

Author

Listed:
  • Benjamin Nefussi
  • Cyrille Schwellnus

Abstract

This paper uses a large French firm-level data set to evaluate the determinants of location choices in services. In a first step, estimates for four broad services sectors are compared with the estimates for the manufacturing sector. Using a discrete choice model, we find that this framework does fairly well in explaining location choices in services and that the parameter estimates for services are close to the ones for manufacturing. We then investigate whether the similarity in estimated parameters is due to a complementarity between location choices in manufacturing and in services, in the sense that manufacturing location choices may cause the location of services. A particularly appropriate services sector, for this purpose is the business services sector, for which input-output linkages with the manufacturing sector are particularly strong. It is found that the downstream demand of French manufacturing firms has a positive effect on the location choice probabilities of French business services firms. This effect is robust.

Suggested Citation

  • Benjamin Nefussi & Cyrille Schwellnus, 2010. "Does FDI in manufacturing cause FDI in business services? Evidence from French firm-level data," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 180-203, February.
  • Handle: RePEc:cje:issued:v:43:y:2010:i:1:p:180-203
    as

    Download full text from publisher

    File URL: http://economics.ca/cgi/xms?jab=v43n1/CJEv43n1p0180.pdf
    File Function: Full text
    Download Restriction: Available to subscribers only. Alternative access through JSTOR and Ingenta.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arnold, Jens & Javorcik, Beata & Mattoo, Aaditya, 2006. "Does Services Liberalization Benefit Manufacturing Firms?," CEPR Discussion Papers 5902, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Davies, Ronald B. & Killeen, Neill, 2015. "Location Decisions of Non-Bank Financial Foreign Direct Investment: Firm-Level Evidence from Europe," Research Technical Papers 04/RT/15, Central Bank of Ireland.
    2. Nuno CRESPO & Maria Paula FONTOURA, 2010. "Does the location of manufacturing determine service sectors’ location choices? Evidence from Portugal," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 10(1).
    3. Davide Castellani & Valentina Meliciani & Loredana Mirra, 2016. "The Determinants of Inward Foreign Direct Investment in Business Services across European Regions," Regional Studies, Taylor & Francis Journals, vol. 50(4), pages 671-691, April.
    4. Alexandre Gazaniol, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Working Papers DT/2012/02, DIAL (Développement, Institutions et Mondialisation).
    5. Broussolle Damien, 2012. "A Note on the Links Between Manufacturing, Goods and Services Exports," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(Special N), pages 600-620, November.
    6. Resmini, Laura & Siedschlag, Iulia, 2013. "Is foreign direct investment to China crowding out the foreign direct investment to other countries?," China Economic Review, Elsevier, vol. 25(C), pages 1-16.
    7. Giuseppe Tattara, 2009. "The Internationalisation of Production Activities of Italian Industrial Districts," Chapters,in: A Handbook of Industrial Districts, chapter 48 Edward Elgar Publishing.
    8. Spyros Arvanitis & Heinz Hollenstein & Tobias Stucki, 2013. "Determinants of Internationalisation - Do they Differ among Sectors and Business Functions?," KOF Working papers 13-348, KOF Swiss Economic Institute, ETH Zurich.
    9. Alessandro Barattieri & Ingo Borchert & Aaditya Mattoo, 2016. "Cross-border mergers and acquisitions in services: The role of policy and industrial structure," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1470-1501, November.
    10. Arvanitis, Spyros & Hollenstein, Heinz & Stucki, Tobias, 2016. "Does the explanatory power of the OLI approach differ among sectors and business functions? Evidence from firm-level data," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-46.
    11. Alexandre Gazaniol, 2015. "The Location Choices of Multinational Firms: The Role of Internationalisation Experience and Group Affiliation," The World Economy, Wiley Blackwell, vol. 38(8), pages 1246-1277, August.
    12. Spies, Julia, 2010. "Network and border effects: Where do foreign multinationals locate in Germany?," Regional Science and Urban Economics, Elsevier, vol. 40(1), pages 20-32, January.
    13. López, Andrés & Niembro, Andrés & Ramos, Daniela, 2014. "Latin America’s competitive position in knowledge-intensive services trade," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    14. repec:dau:papers:123456789/9018 is not listed on IDEAS
    15. Fernandes, Ana M. & Paunov, Caroline, 2012. "Foreign direct investment in services and manufacturing productivity: Evidence for Chile," Journal of Development Economics, Elsevier, vol. 97(2), pages 305-321.
    16. Conti, Giuliano & Lo Turco, Alessia & Maggioni, Daniela, 2014. "Spillovers through backward linkages and the export performance of business services. Evidence from a sample of Italian firms," International Business Review, Elsevier, vol. 23(3), pages 552-565.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:43:y:2010:i:1:p:180-203. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler). General contact details of provider: http://edirc.repec.org/data/ceaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.