FDI of German companies during globalization and deglobalization

Gerhard Kling; Joerg Baten; Kirsten Labuske

doi:10.1007/s11079-009-9122-z

FDI of German companies during globalization and deglobalization

Gerhard Kling, Joerg Baten, Kirsten Labuske

Accountancy & Finance, Finance

Research output: Contribution to journal › Article › peer-review

Abstract

Based on micro-level data of German companies from 1873 to 1927, we identified horizontal and vertical FDI applying a Knowledge-Capital model and analyzed individual FDI decisions. Our KC model revealed that market-driven FDI predominated; however, wage gaps and differences in human capital stimulated cost-driven FDI flows, which accounted for up to 10% of total FDI. On an individual level, large companies with high profitability conducted more FDI. Higher tariffs after WWI enhanced FDI, as companies could circumvent trade barriers—but declining openness reduced FDI. In spite of disintegration after WWI, the propensity to invest increased due to higher market concentration and firm specific investment patterns—albeit industry agglomeration effects were of minor importance.

Original language	English
Pages (from-to)	247-270
Number of pages	24
Journal	Open Economies Review
Volume	22
Issue number	2
DOIs	https://doi.org/10.1007/s11079-009-9122-z
Publication status	Published - Apr 2011

Keywords

FDI
Globalization
protection
Germany

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Cite this

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title = "FDI of German companies during globalization and deglobalization",

abstract = "Based on micro-level data of German companies from 1873 to 1927, we identified horizontal and vertical FDI applying a Knowledge-Capital model and analyzed individual FDI decisions. Our KC model revealed that market-driven FDI predominated; however, wage gaps and differences in human capital stimulated cost-driven FDI flows, which accounted for up to 10% of total FDI. On an individual level, large companies with high profitability conducted more FDI. Higher tariffs after WWI enhanced FDI, as companies could circumvent trade barriers—but declining openness reduced FDI. In spite of disintegration after WWI, the propensity to invest increased due to higher market concentration and firm specific investment patterns—albeit industry agglomeration effects were of minor importance.",

keywords = "FDI, Globalization, protection, Germany",

author = "Gerhard Kling and Joerg Baten and Kirsten Labuske",

note = "Acknowledgements We thank the anonymous referee for her or his comments that helped us to improve our paper significantly. We thank Olivier Accominotti, Marc Flandreau, Michael Clemens, Mar Rubio for providing crucial data on protection, and participants of the Economic History Society Annual Conference 2006, the Second Conference on German Cliometrics 2006, seminars at the Universities of Barcelona and Tuebingen, the Tuebingen economic history research group for their comments on earlier versions.",

year = "2011",

month = apr,

doi = "10.1007/s11079-009-9122-z",

language = "English",

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AU - Kling, Gerhard

AU - Baten, Joerg

AU - Labuske, Kirsten

N1 - Acknowledgements We thank the anonymous referee for her or his comments that helped us to improve our paper significantly. We thank Olivier Accominotti, Marc Flandreau, Michael Clemens, Mar Rubio for providing crucial data on protection, and participants of the Economic History Society Annual Conference 2006, the Second Conference on German Cliometrics 2006, seminars at the Universities of Barcelona and Tuebingen, the Tuebingen economic history research group for their comments on earlier versions.

PY - 2011/4

Y1 - 2011/4

N2 - Based on micro-level data of German companies from 1873 to 1927, we identified horizontal and vertical FDI applying a Knowledge-Capital model and analyzed individual FDI decisions. Our KC model revealed that market-driven FDI predominated; however, wage gaps and differences in human capital stimulated cost-driven FDI flows, which accounted for up to 10% of total FDI. On an individual level, large companies with high profitability conducted more FDI. Higher tariffs after WWI enhanced FDI, as companies could circumvent trade barriers—but declining openness reduced FDI. In spite of disintegration after WWI, the propensity to invest increased due to higher market concentration and firm specific investment patterns—albeit industry agglomeration effects were of minor importance.

AB - Based on micro-level data of German companies from 1873 to 1927, we identified horizontal and vertical FDI applying a Knowledge-Capital model and analyzed individual FDI decisions. Our KC model revealed that market-driven FDI predominated; however, wage gaps and differences in human capital stimulated cost-driven FDI flows, which accounted for up to 10% of total FDI. On an individual level, large companies with high profitability conducted more FDI. Higher tariffs after WWI enhanced FDI, as companies could circumvent trade barriers—but declining openness reduced FDI. In spite of disintegration after WWI, the propensity to invest increased due to higher market concentration and firm specific investment patterns—albeit industry agglomeration effects were of minor importance.

KW - FDI

KW - Globalization

KW - protection

KW - Germany

U2 - 10.1007/s11079-009-9122-z

DO - 10.1007/s11079-009-9122-z

M3 - Article

VL - 22

SP - 247

EP - 270

JO - Open Economies Review

JF - Open Economies Review

SN - 0923-7992

IS - 2

ER -

FDI of German companies during globalization and deglobalization

Abstract

Keywords

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