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Headquarters intangible capital and FDI

Author

Listed:
  • Salvador Gil-Pareja

    (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain). INTECO Research Unit)

  • Rafael Llorca-Vivero

    (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain). INTECO Research Unit)

  • Jordi Paniagua

    (Dep. Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain))

Abstract

Headquarters (HQs) provide a wide range of services, playing a fundamental role in Foreign Direct Investment (FDI). We use the structural gravity equation to investigate the effect of regional HQs on three dimensions of FDI (number of foreign firms, capital investment, and jobs) at the country-pair- sector level. Furthermore, we explore two underlying mechanisms that help explain this relationship: financial constraints and informational costs and uncertainty. We find a positive effect of regional HQs on FDI, as well as inter-country and inter-sector spillovers. Our results are robust, accounting for HQ intensity, domestic investment flows in the three dimensions and endogeneity tests.

Suggested Citation

  • Salvador Gil-Pareja & Rafael Llorca-Vivero & Jordi Paniagua, 2021. "Headquarters intangible capital and FDI," Working Papers 2107, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2107
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; headquarters; spillovers; intangible capital; credit constraints; structural gravity;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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