Jörn Kleinert

Determinants of German FDI: New Evidence from Micro-Data

This paper provides new evidence on the foreign direct investment stocks of German firms. We use firm-level data for the years 1990-2000 to describe the regional and sectoral patterns of German FDI through gravity-type equations. We provide evidence on the patterns of FDI by sector, by size of the foreign affiliate, and by the number of affiliates per host country. While market size and geographic distance have a significant impact on FDI stocks, we also find differences in the determinants of FDI between sectors as well as between the size of foreign affiliates and the number of foreign affiliates.

Where Enterprises Lead, People Follow? Links Between Migration and German FDI

Globalization has affected the integration of markets through many different channels, including movements of factors and trade in goods. From a theoretical point of view, the interaction between the different channels of integration can take different forms. The aim of this paper is to analyze the interaction between different channels of integration empirically. More specifically, we use state-level German data to answer the question whether and how migration and FDI decisions and thus integration of labor and capital markets are linked. Our findings suggest that FDI and migration have similar determinants. Moreover, there is substantial evidence that factors cluster.

Comment on Kar-yiu Wong

In a world of increasing globalization and increasing importance of all channels of international factor movements, the theoretical understanding of the relationship between migration, capital movements, and trade is necessary for both empirical analysis and policy advice. Economists have devoted some effort to the analysis of the relationship between trade and foreign direct investment (Brainard 1997, Blonigen 2001, Markusen 2002) and trade and migration (Gould and Findlay 1994) but less so to the relationship between different types of factor movements. However, the question how FDI affects international labor migration is an important one, since whether capital and labor movements are substitutes or complements yields different policy implications.