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The Effects at Home of Initiating Production Abroad: Evidence from Matched French Firms

  • Alexander Hijzen
  • Sébastien Jean
  • Thierry Mayer

Based on matching techniques in combination with a difference-in-difference estimator, this paper estimates the effects at home of initiating production abroad through the establishment of a foreign production affiliate. The analysis covers manufacturing and service firms active in France during the period 1987-1999. We show that the motivation to start producing abroad is an important determinant of its impact at home. Market-seeking FDI in manufacturing is associated with significant scale effects, resulting in job creation. By contrast, factor-seeking FDI in manufacturing has no significant effect on employment. FDI in the services sector is associated with significant positive employment effects, which may reflect the possibility that FDI in this sector is predominantly motivated by market access.

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File URL: http://www.nottingham.ac.uk/gep/documents/papers/2009/09-24.pdf
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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 09/24.

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Handle: RePEc:not:notgep:09/24
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