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Foreign Direct Investment in Producer Services: Theory and Empirical Evidence

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  • Horst Raff
  • Marc von der Ruhr

Abstract

This paper examines the pattern of foreign direct investment (FDI) in producer services. We develop a model of FDI in these services and test its predictions using panel data on U.S.FDI in 25 host countries from 1976 to 1995. We find evidence that, in addition to governmental and cultural barriers, producer-service firms may face informational barriers to entry into foreign markets. The presence of such barriers provides a possible explanation for the observation that producer-service FDI tends to follow FDI by downstream industries.

Suggested Citation

  • Horst Raff & Marc von der Ruhr, 2001. "Foreign Direct Investment in Producer Services: Theory and Empirical Evidence," CESifo Working Paper Series 598, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_598
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    References listed on IDEAS

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    Cited by:

    1. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    2. Ishikawa, Jota & Morita, Hodaka & Mukunoki, Hiroshi, 2010. "FDI in post-production services and product market competition," Journal of International Economics, Elsevier, vol. 82(1), pages 73-84, September.
    3. John P. Weche Geluebcke, 2011. "Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics," Working Paper Series in Economics 213, University of Lüneburg, Institute of Economics.
    4. Giuliano CONTI & Alessia LO TURCO & Daniela MAGGIONI, 2010. "Backward linkages and the export;performance of business services.;Evidence from a sample of Italian firms," Working Papers 352, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    5. Markus Kelle & Jörn Kleinert & Horst Raff & Farid Toubal, 2013. "Cross-border and Foreign Affiliate Sales of Services: Evidence from German Microdata," The World Economy, Wiley Blackwell, vol. 36(11), pages 1373-1392, November.
    6. Joseph Daniels & Walid Hejazi & Marc von der Ruhr, 2005. "Regional vs. Global Financing Strategies for U.S. MNEs," Working Papers and Research 0511, Marquette University, Center for Global and Economic Studies and Department of Economics.
    7. Bala Ramasamy & Matthew Yeung, 2010. "The Determinants of Foreign Direct Investment in Services," The World Economy, Wiley Blackwell, vol. 33(4), pages 573-596, April.
    8. Van Long, Ngo & Riezman, Raymond & Soubeyran, Antoine, 2005. "Fragmentation and services," The North American Journal of Economics and Finance, Elsevier, vol. 16(1), pages 137-152, March.
    9. repec:gam:jijfss:v:6:y:2018:i:2:p:46-:d:143042 is not listed on IDEAS
    10. Ngo Van Long & Ray Riezman & Antoine Soubeyran, 2001. "Fragmentation, Outsourcing and the Service Sector," CIRANO Working Papers 2001s-43, CIRANO.
    11. Lale Berko¨z & Engin Eyuboglu, 2007. "Intrametropolitan Location of Producer-service FDI in Istanbul," European Planning Studies, Taylor & Francis Journals, vol. 15(3), pages 357-381, April.
    12. Xu, Helian & Cheng, Long, 2016. "The QAP weighted network analysis method and its application in international services trade," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 448(C), pages 91-101.

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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