IDEAS home Printed from https://ideas.repec.org/p/ags/hwwadp/26376.html
   My bibliography  Save this paper

German FDI and Integration of Production in the EU

Author

Listed:
  • Jungnickel, Rolf
  • Keller, Dietmar

Abstract

In this paper, we investigate internationalization strategies of German manufacturing firms in the European Union. We give reasons for the hypothesis that traditional market strategies had been replaced by border-crossing production networking based on the comparative advantage of host countries and on specialisation and scale economies. Our empirical test of this hypothesis shows, on the one hand, that traditional market strategies are not outdated. On the other hand, there are clear signs of international network strategies. They form an important component in internationalization strategies of multinationals in the Internal Market. The location of foreign production of German multinationals is, among others, oriented towards the technological potential of host countries indicating the importance of asset-seeking strategies. Furthermore, the positive connection between foreign production and both exports and imports points at the significance of efficiency-oriented strategies with foreign affiliates taking over an active part and not only being recipient of components of the German parent companies. However, there is hardly evidence that significant changes towards network strategies took place between 1996 and 2000.

Suggested Citation

  • Jungnickel, Rolf & Keller, Dietmar, 2003. "German FDI and Integration of Production in the EU," Discussion Paper Series 26376, Hamburg Institute of International Economics.
    • Handle: RePEc:ags:hwwadp:26376
    DOI: 10.22004/ag.econ.26376
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/26376/files/dp030232.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.26376?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-544, September.
    2. Hatzius, J., 1997. "Domestic jobs and foreign wages: labour demand in Swedish multinationals," LSE Research Online Documents on Economics 20350, London School of Economics and Political Science, LSE Library.
    3. Beckmann, Christoph, 1997. "Internationalisierung von Forschung und Entwicklung in multinationalen Unternehmen," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 1146, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    4. James R. Markusen & Anthony J. Venables, 2021. "Multinational firms and the new trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 3, pages 47-67, World Scientific Publishing Co. Pte. Ltd..
    5. J Hatzius, 1997. "Domestic Jobs and Foreign Wages: Labour Demand in Swedish Multinationals," CEP Discussion Papers dp0337, Centre for Economic Performance, LSE.
    6. Henneberger Fred & Ziegler Alexandre, 2000. "Direktinvestitionen, Exportströme und Beschäftigungseffekte. Gepoolte Regressionen mit Daten aus der amtlichen Statistik für die Schweiz 1985-1997 unter Berücksichtigung branchenspezifischer Besonderh," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 220(2), pages 147-164, April.
    7. Beckmann, Christoph, 1997. "Internationalisierung von Forschung und Entwicklung in multinationalen Unternehmen," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 882, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    8. Markusen, James R. & Venables, Anthony J. & Eby Konan, Denise & Zhang, Kevin H., 1996. "A Unified Treatment of Horizontal Direct Investment, Vertical Direct Investment, and the Pattern of Trade in Goods and Services," Working Paper Series 465, Research Institute of Industrial Economics.
    9. Barrell, Ray & Pain, Nigel, 1999. "Domestic institutions, agglomerations and foreign direct investment in Europe," European Economic Review, Elsevier, vol. 43(4-6), pages 925-934, April.
    10. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    11. Barrell, Ray & Ian Hurst & Tatiana Kirsanova, 2003. "Choosing the Regime in an Uncertain World, the UK and Monetary Union," Royal Economic Society Annual Conference 2003 16, Royal Economic Society.
    12. Michael Pfaffermayr, 1996. "Ownership advantages, home production, foreign production and exports of direct investing firms—Some evidence from austrian firms," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 23(3), pages 317-328, October.
    13. Nigel Pain, 1997. "Export performance and and the role of foreign direct investment," National Institute of Economic and Social Research (NIESR) Discussion Papers 131, National Institute of Economic and Social Research.
    14. repec:bla:kyklos:v:54:y:2001:i:1:p:89-113 is not listed on IDEAS
    15. Fors, Gunnar & Svensson, Roger, 1994. "R&D in Swedish Multinational Corporations," Working Paper Series 406, Research Institute of Industrial Economics.
    16. Joachim Wagner, 2003. "Unobserved firm heterogeneity and the size-exports nexus: Evidence from German panel data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 139(1), pages 161-172, March.
    17. John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(1), pages 1-30, March.
    18. Avik Chakrabarti, 2001. "The Determinants of Foreign Direct Investments: Sensitivity Analyses of Cross‐Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-114, February.
    19. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    20. John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(2), pages 189-223, June.
    21. Audretsch, David B & Feldman, Maryann P, 1995. "Innovative Clusters and the Industry Life Cycle," CEPR Discussion Papers 1161, C.E.P.R. Discussion Papers.
    22. George N. Yannopoulos, 1990. "Foreign Direct Investment and European Integration: The Evidence from the Formative Years of the European Community," Journal of Common Market Studies, Wiley Blackwell, vol. 28(3), pages 235-259, March.
    23. Mr. Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 2001/175, International Monetary Fund.
    24. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
    25. Barrell,Ray & Pain,Nigel (ed.), 1999. "Innovation, Investment and the Diffusion of Technology in Europe," Cambridge Books, Cambridge University Press, number 9780521620871, October.
    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. Václav Žďárek, 2009. "Moderní způsoby produkce a přímé zahraniční investice [Modern methods of production and foreign direct investment]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(4), pages 509-543.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keller, Dietmar & Jungnickel, Rolf, 2003. "German FDI and Integration of Production in the EU," HWWA Discussion Papers 232, Hamburg Institute of International Economics (HWWA).
    2. repec:bla:jcmkts:v:46:y:2008:i::p:969-1000 is not listed on IDEAS
    3. Fung , K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and central and eastern European countries : regional networks, global supply chain, or international competitors?," Policy Research Working Paper Series 4689, The World Bank.
    4. Salvador Barrios & Holger Görg & Eric Strobl, 2003. "Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis," Open Economies Review, Springer, vol. 14(4), pages 397-418, October.
    5. Davies, Ronald B., 2005. "Fragmentation of headquarter services and FDI," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 61-79, March.
    6. Camarero, Mariam & Moliner, Sergi & Tamarit, Cecilio, 2021. "Japan's FDI drivers in a time of financial uncertainty. New evidence based on Bayesian Model Averaging," Japan and the World Economy, Elsevier, vol. 57(C).
    7. Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2003. "The evolution of US outward foreign direct investment in the pacific rim: a cross-time and country analysis," Applied Economics, Taylor & Francis Journals, vol. 35(16), pages 1779-1787.
    8. Chiara Franco & Francesco Rentocchini & Giuseppe Vittucci Marzetti, 2008. "Why do firms invest abroad? An analysis of the motives underlying Foreign Direct Investments," Department of Economics Working Papers 0817, Department of Economics, University of Trento, Italia.
    9. Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2001. "Expansion Strategies of U.S. Multinational Firms," BEA Papers 0012, Bureau of Economic Analysis.
    10. Elvira Sapienza, 2009. "The interaction between Export and FDI: Central-Eastern Europe and EU15," Quaderni DSEMS 13-2009, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
    11. Fung , K.C. & Korhonen, Iikka & Li, Ke & Ng, Francis, 2008. "China and central and eastern European countries : regional networks, global supply chain, or international competitors?," Policy Research Working Paper Series 4689, The World Bank.
    12. repec:zbw:bofitp:2008_009 is not listed on IDEAS
    13. Camarero, Mariam & Montolio, Laura & Tamarit, Cecilio, 2019. "What drives German foreign direct investment? New evidence using Bayesian statistical techniques," Economic Modelling, Elsevier, vol. 83(C), pages 326-345.
    14. Ms. Florence Jaumotte, 2004. "Foreign Direct Investment and Regional Trade Agreements: The Market Size Effect Revisited," IMF Working Papers 2004/206, International Monetary Fund.
    15. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    16. Rosa Forte, 2004. "The relationship between foreign direct investment and international trade. Substitution or complementarity? A survey," FEP Working Papers 140, Universidade do Porto, Faculdade de Economia do Porto.
    17. Mariam Camarero & Sergi Moliner & Cecilio Tamarit, 2021. "Is there a euro effect in the drivers of US FDI? New evidence using Bayesian model averaging techniques," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(4), pages 881-926, November.
    18. James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
    19. 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.
    20. Ekholm, Karolina & Braconier, Henrik, 2001. "Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU," CEPR Discussion Papers 3052, C.E.P.R. Discussion Papers.
    21. José Manuel Martins Caetano & Aurora Galego & Elsa Vaz & Isabel Vieira & Carlos Vieira, 2002. "The Impacts of the Eurozone´s Eastward Enlargement on Trade and FDI: Survey of the Literature," Economics Working Papers 1_2002, University of Évora, Department of Economics (Portugal).
    22. Yao, Shujie & Wang, Pan & Zhang, Jing & Ou, Jinghua, 2016. "Dynamic relationship between China's inward and outward foreign direct investments," China Economic Review, Elsevier, vol. 40(C), pages 54-70.

    More about this item

    Keywords

    International Relations/Trade;

    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:ags:hwwadp:26376. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/hwwaade.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.