Foreign Direct Investment in Services (FDIS)
Final Report Abstract
The project Foreign Direct Investment in Services (FDIS) has made considerable progress in three areas. First, we prepared, cleaned, adjusted and merged two complementary firm-level datasets on trade and FDI in commercial services by French and German firms, respectively. These are now among the most comprehensive datasets on trade and FDI in services anywhere. These datasets have proved to be a valuable asset for our research and will continue to be extremely useful for future projects. Second, we showed that the patterns of trade and FDI in commercial services are similar to those of trade in goods in some respects, but quite different in others. Among the similarities are that few large producers account for the lion's share of both exports and imports. Some of the more remarkable differences include (i) the importanl role of trust between business partners for services trade, (ii) the strong effect of import competition from advanced countries on exit of domestic service companies, and (iii) and the fact that at the micro-level trade and FDI in services tend to be substitutes rather than complements. Third, a key result from the analysis so far is that the supply of services is closely interconnected with the supply of goods. In particular, we discovered that a large share of German producer service exports are carried out by manufacturing firms and are complementary to German goods trade. We also found a strong role of services in helping manufacturers source materials from abroad. More broadly, our research suggests that, if one wants understand the effects of economic integration and associated trade policies in today's world, it is not enough to examine liberalization in goods or services markets separately. Indeed when services such as retailing, construction or data processing are closely associated with the products themselves one has to explicitly take into account the complementarities between the supply of goods and services. This is what this research project has started to do in light of the facts that have unfolded over the last few decades.
Publications
- (2008). Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects. Review of World Economics 144, 1-33
Raff, H. and Michael Ryan
- (2009). Buyer power in international markets. Journal of International Economics 79, 222-229
Raff, Horst and Nicolas Schmitt
- (2010). German Firms in Service Trade. Applied Economics Quarterly 56(1): 5-72
Kelle, Markus and Jörn Kleinert
- (2010). Importations de biens intermédiaires et choix organisationnel des firmes multinationales françaises. Economic et Statistique 435-436
Defever Fabrice and Farid Toubal
- (2011). Endogenous transport costs in intemationai trade. IAW Discussion Paper 74
Kleinert Jörn, and Spies Julia
- Trade and FDI in Services: Firm Level Evidence from Germany, PhD Thesis, University of Kiel 2011
Kelle, Markus
- (2012). All you need is trade: On the In(ter)dependence of trade and asset holdings in gravity equations. IAW Discussion Paper 80
Kleinert, Jörn and Katja Neugebauer
- (2012). Cross-border and foreign-affiliate sales of services: Evidence from German micro-level data. CESifo Working Paper 3806
Kelle, Markus, Jörn Kleinert, Horst Raff, and Farid Toubal
- (2012). Crossing industrial borders: German manufacturers as services exporters. Centro Studi Luca d'Agliano Development Working Papers 329
Kelle, Markus
- (2012). Firm productivity and the foreign-market entry decision. Journal of Economics and Management Strategy 21, 849-871
Raff, H., Mike Ryan, and Frank Stähler
- (2012). Imports and the structure of retail markets. Canadian Journal of Economics 45, 1431-1455
Raff, Horst and Nicolas Schmitt
- (2012). Manufacturers and retailers in the global economy. CESifo Working Paper 3508
Raff, Horst and Nicolas Schmitt
