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Strategic FDI and industrial ownership structure

Author

Listed:
  • Christopher J. Ellis
  • Dietrich Fausten

Abstract

We argue that different industrial ownership structures generate different incentives for firms to engage in FDI. A comparison is made between (partially) cooperative structures such as the Japanese kieretsu and Korean chaebol systems and competitive structures such as U.S. firms. It is found that ownership structure has significant implications for the probability of initial FDI. Whether or not a cooperative structure is also coordinated turns out to be crucial in predicting FDI behaviour. This has further implications for the optimal FDI incentives of potential host countries and for how empirical studies might be designed. JEL classification: F10, F21, F23 Stratégie d’investissements directs à l’étranger et structure de propriété de l’industrie. Les auteurs suggèrent que des structures différentes de propriété dans l’industrie engendrent des incitations diverses pour les entreprises à investir directement à l’étranger. On fait des comparaisons entre des structures partiellement coopératives comme celles des kieretsus au Japon et des chaebol en Corée, et des structures concurrentielles comme celles qui existent aux Etats–Unis. Il appert que la structure de propriété a un impact significatif sur la probabilité de faire initialement un investissement direct à l’étranger. Le fait que la structure de coopération engendre aussi une coordination s’avère d’une importance centrale pour prédire le comportement d’investissement direct à l’étranger. Voilà qui a des implications pour le design des incitations à investir par les pays hôtes potentiels, et pour le design des études empiriques de ces phénomènes.

Suggested Citation

  • Christopher J. Ellis & Dietrich Fausten, 2002. "Strategic FDI and industrial ownership structure," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(3), pages 476-494, August.
  • Handle: RePEc:wly:canjec:v:35:y:2002:i:3:p:476-494
    DOI: 10.1111/1540-5982.00141
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    Cited by:

    1. Bruce A. Blonigen & Christopher J. Ellis & Dietrich Fausten, 2000. "Industrial Groupings and Strategic FDI: Theory and Evidence," NBER Working Papers 8046, National Bureau of Economic Research, Inc.
    2. Gross, Dominique M. & Raff, Horst & Ryan, Michael, 2005. "Inter- and intra-sectoral linkages in foreign direct investment: evidence from Japanese investment in Europe," Journal of the Japanese and International Economies, Elsevier, vol. 19(1), pages 110-134, March.
    3. Lahimer, Noomen, 2009. "La contribution des investissements directs étrangers à la réduction de la pauvreté en Afrique subsaharienne," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/1167 edited by Goaied, Mohamed & Bienaymé, Alain.
    4. Blonigen, Bruce A. & Ellis, Christopher J. & Fausten, Dietrich, 2005. "Industrial groupings and strategic FDI," Japan and the World Economy, Elsevier, vol. 17(2), pages 125-150, April.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - 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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