The Location of Domestic and Foreign Production Affiliates by French Multinational Firms

Author/Editor: Méjean, Isabelle ; Mayer, Thierry ; Nefussi, Benjamin
Publication Date: January 01, 2010
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Economists interested in location choices usually focus their attention on investments abroad. This neglects the fact that multinational enterprises continue to invest domestically while undertaking foreign expansion. This paper compares investments at home and abroad. Our firm-level dataset shows an important home bias in productive investments. Part of this "excessive" domestic investment is explained by standard determinants of location choices. The interdependence between affiliates of the same industrial group however accounts for the lion's share of the home bias. Moreover, French firms' propensity to invest abroad is positively related to their productivity and the size of their intangible assets.
Series: Working Paper No. 10/22
Subject(s): Economic models | Foreign direct investment | Industrial investment | Industrial production | Manufacturing sector | Productivity | Transnational corporations

Author's Keyword(s): Location choice | Multinational firms | Conditional logit model
Publication Date: January 01, 2010
ISBN/ISSN: 9781451962345 Format: Paper
Stock No: WPIEA2010022 Pages: 43
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