IDEAS home Printed from https://ideas.repec.org/p/red/sed013/1123.html
   My bibliography  Save this paper

Measuring Horizontal and Vertical Foreign Direct Investment

Author

Listed:
  • Veronica Rappoport

    (London School of Economics)

  • Kim Ruhl

    (New York University Stern School of Busi)

  • Natalia Ramondo

    (Arizona State University)

Abstract

Using firm-level data on U.S. multinationals, we find that affiliates created for vertical FDI motives seem to be larger and fewer—both within the firm and across affiliates—while affiliates that appear to be created for horizontal FDI motives are smaller and more common. Next, we build a model with heterogeneous firms that endogenously choose to create affiliates for vertical or horizontal reasons, and show that the model can qualitatively reproduce the patterns we document in the data. We use the model and the data to measure the costs of opening different types of affiliates: the costs of vertical versus horizontal FDI. We use the calibrated model to perform counterfactual exercises aimed at answering questions such as: How much does a country gain from lowering the barriers to vertical FDI, and to horizontal FDI? How do these gains change with country characteristics?

Suggested Citation

  • Veronica Rappoport & Kim Ruhl & Natalia Ramondo, 2013. "Measuring Horizontal and Vertical Foreign Direct Investment," 2013 Meeting Papers 1123, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:1123
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed013:1123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.