Working Paper: NBER ID: w2092
Authors: Magnus Blomström; Robert E. Lipsey
Abstract: This paper examines the importance of firm size in explaining foreign direct investment with data from American and Swedish firms. The results suggest that firm size only has a threshold effect on foreign investment, an effect on the decision to invest abroad. Once, however, a firm has jumped the initial barriers to foreign production, size has no effect on the fraction of the firm's resources devoted to foreign activity. Among firms that invest in foreign production large firms do not appear to have any particular advantage over small investing firms.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| firm size (L25) | probability of being a foreign investor (F21) |
| probability of being a foreign investor (F21) | extent of foreign production (F23) |
| firm size (L25) | extent of foreign production (F23) |
| firm size (L25) | allocation of resources to foreign activities (F23) |