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Home Market Effects of Outward FDI: Evidence Based on Amadeus Firm-Level Data

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Part of the Schriftenreihe der Österreichischen Gesellschaft für Europaforschung (ECSA Austria) / European Community Studies Association of Austria Publication Series book series (EUROPAFORSCH,volume 12)

Abstract

In this paper we investigate substitution possibilities between activities abroad and domestic activities using firm level data on Austrian and German MNEs drawn from the “AMADEUS” database for the period 2000–2004. As a measure of domestic activities we use both parent company employment and turnover of parent companies at home. Activities abroad are measured as foreign affiliate employment and foreign affiliate turnover. We also distinguish between manufacturing and non-manufacturing as well as between different host regions (i.e. EU-15 and CEEC). In order to control for the possible impact of outliers we use robust regression techniques. Estimates of the robust regression method and instrumental variable methods indicate that foreign and domestic economic activities and foreign operations are complementary to each other at least for Austrian multinationals. This holds also for foreign operations in CEEC countries. Overall, the resulting effects are very small, however.

An earlier version of the paper was presented at the ETSG 2006 conference and at the Int. Economic Workshop “The EU and Emerging Markets: Trade and Investment Relations with Latin America, East Asia and Transition Countries” 2007 at the Vienna University of Economics and Business. Financial support from the Austrian National Bank, Anniversary Fund, Grant No. 11778 is kindly acknowledged.

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Falk, M., Wolfmayr, Y. (2009). Home Market Effects of Outward FDI: Evidence Based on Amadeus Firm-Level Data. In: Tondl, G. (eds) The EU and Emerging Markets. Schriftenreihe der Österreichischen Gesellschaft für Europaforschung (ECSA Austria) / European Community Studies Association of Austria Publication Series, vol 12. Springer, Vienna. https://doi.org/10.1007/978-3-211-92662-8_3

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  • DOI: https://doi.org/10.1007/978-3-211-92662-8_3

  • Publisher Name: Springer, Vienna

  • Print ISBN: 978-3-211-92661-1

  • Online ISBN: 978-3-211-92662-8