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

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  • Alexander Hijzen
  • Sébastien Jean
  • Thierry Mayer

Abstract

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.

Suggested Citation

  • Alexander Hijzen & Sébastien Jean & Thierry Mayer, 2009. "The Effects at Home of Initiating Production Abroad: Evidence from Matched French Firms," Discussion Papers 09/24, University of Nottingham, GEP.
  • Handle: RePEc:not:notgep:09/24
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    More about this item

    Keywords

    FDI; multinationals; propensity score matching; services; delocalisation;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • 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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