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Cross‐country Services Versus Manufacturing Activity of Multinational Firms in Response to Services Versus Goods Policy
Author(s) -
Egger Peter,
Merlo Valeria,
Wamser Georg
Publication year - 2017
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12332
Subject(s) - restrictiveness , multinational corporation , foreign direct investment , goods and services , business , trade in services , investment (military) , international economics , index (typography) , international trade , economics , trade barrier , politics , market economy , finance , macroeconomics , philosophy , linguistics , world wide web , political science , computer science , law
This paper assesses the consequences of trade costs on goods and services for the distribution of foreign direct investment ( FDI ) across goods and services as well as across countries. The paper employs data on the universe of G erman FDI abroad which are collected at the firm level and aggregated for the purpose of this paper to two sectors – goods and services – and 79 countries, using data for the year 2005. Key findings are that services trade costs as reflected in the services trade restrictiveness index and bilateral investment treaty membership are the most important policy drivers of the activity of G erman‐owned multinational firms in both goods and services. An increase in services trade restrictions raises goods activity at the expense of services activity. This effect is more pronounced the more important host countries in terms of the G erman FDI are.