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Firm Size and Foreign Direct Investment

  • Magnus Blomstrom
  • Robert E. Lipsey

This paper examines the importance of firm size in explaining foreign direct investment with data from American and Swedish firms. The results suggest that firm size only has a threshold effect on foreign investment, an effect on the decision to invest abroad. Once, however, a firm has jumped the initial barriers to foreign production, size has no effect on the fraction of the firm's resources devoted to foreign activity. Among firms that invest in foreign production large firms do not appear to have any particular advantage over small investing firms.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2092.

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Date of creation: Dec 1986
Date of revision:
Publication status: published as "Firm Size and Foreign Operation of Multinationals." From The Scandinavian Journal of Economics, Vol. 93, No. 1, pp. 101-107, (1991).
Handle: RePEc:nbr:nberwo:2092
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  1. Horst, Thomas, 1972. "Firm and Industry Determinants of the Decision to Invest Abroad: An Empirical Study," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 258-66, August.
  2. Caves, Richard E, 1974. "Causes of Direct Investment: Foreign Firms' Shares in Canadian and United Kingdom Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 56(3), pages 279-93, August.
  3. Robert E. Lipsey & Irving B. Kravis & Linda O'Connor, 1983. "Characteristics of U.S. Manufacturing Companies Investing Abroad and their Choice of Production Locations," NBER Working Papers 1104, National Bureau of Economic Research, Inc.
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