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

ByIsabelle Mejean, Thierry Mayer, Benjamin Nefussi

January 1, 2010

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.

Subject: Balance of payments, Econometric analysis, Economic sectors, Employment, Foreign direct investment, Labor, Logit models, Production, Productivity, Transnational corporations

Keywords: choices of affiliate location, Conditional logit model, dependent variable, Employment, Europe, firm level, firm's network, fixed cost, Foreign direct investment, input-producing firm, investing firm, Location choice, Logit models, multi-national firm, Multinational firms, network variable, production establishment, Productivity, standard deviation, Transnational corporations, WP

Pages:
32
Volume:
2010
DOI:
https://doi.org/10.5089/9781451962345.001
Issue:
022
Series:
Working Paper No. 2010/022
Stock No:
WPIEA2010022
ISBN:
9781451962345
ISSN:
1018-5941

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