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Multinational activity of European firms and heterogeneity



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Fariñas García, José Carlos and Martín Marcos, Ana and Velázquez Angona, Francisco Javier (2018) Multinational activity of European firms and heterogeneity. World Economy, 41 (5). pp. 1166-1195. ISSN 0378-5920

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Official URL: https:doi.org/10.1111/twec.12613


This paper offers an empirical assessment of the multinational activity of European firms. It takes the predictions of models of firm heterogeneity and FDI activity as a reference to explore the characteristics of multinational firms from 30 European countries. We use a data set, based on ORBIS, which links information of parent–affiliate pairs of firms. Our results show that more productive firms have greater multinational activity in terms of both scope, the number of foreign markets where they invest, and scale, the volume of local sales by subsidiaries active in foreign markets. The estimation of gravity equations shows that country characteristics that encourage multinational activity successively induce the entry of less productive parent firms. We confirm this asymmetry for the GDPs of the home and host countries, distance, contiguity and other standard gravity equation variables.

Item Type:Article
Uncontrolled Keywords:Foreign direct investment; Multinational corporations; Productivity; Firm heterogeneity
Subjects:Social sciences > Economics > World economy
Social sciences > Economics > Business enterprises
Social sciences > Economics > Finance
ID Code:54954
Deposited On:08 Apr 2019 12:38
Last Modified:08 Apr 2019 14:31

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