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Does FDI in Manufacturing Cause FDI in Business Services? Evidence from French Firm-Level Data

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  • 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. Ce mémoire utilise une base de données française au niveau de la firme pour examiner les déterminants des choix de localisation dans le monde des services. Des estimations pour quatre grands secteurs de services sont d'abord comparées à celles qu'on a pour le secteur manufacturier. Utilisant un modèle de choix discret, on découvre que ce cadre d'analyse explique assez bien les choix de localisation dans les services, et que la taille des paramètres pour les services est proche de celle des paramètres pour le manufacturier. On se demande ensuite si la similarité des paramètres estimés est attribuable à une complémentarité des choix de localisation dans les services et le manufacturier, en ce sens que les choix de localisation manufacturière peuvent être la cause des choix de localisation dans les services. Un cas particulièrement intéressant est celui des services d'affaires pour lequel les liens interindustriels (input‐output) avec le sect
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Suggested Citation

  • Benjamin Nefussi & Cyrille Schwellnus, 2007. "Does FDI in Manufacturing Cause FDI in Business Services? Evidence from French Firm-Level Data," Working Papers 2007-21, CEPII research center.
    • Handle: RePEc:cii:cepidt:2007-21
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    References listed on IDEAS

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    JEL classification:

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

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