Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2016:16: Exploring Outward FDI and the Choice of Destination: Evidence from Swedish Firm-Level Data

Zouheir El-Sahli (), Joakim Gullstrand () and Karin Olofsdotter ()
Additional contact information
Zouheir El-Sahli: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Joakim Gullstrand: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Karin Olofsdotter: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: Using Swedish firm-level data on all firms and their affiliates abroad, we investigate what observable firm and country characteristics affect the size of affiliate firms in a particular destination. We employ the richness of the data to investigate the importance of destination country factors in explaining firm outward FDI activities and distinguish between the factors that affect such activities in manufacturing versus services firms as well as vertical versus horizontal investments. Our results lend support to existing theories of multinational activity, including observable differences between vertical and horizontal manufacturing firms, as well as between services and manufacturing FDI firms.

Keywords: outward FDI; globalization; FDI destination; heterogeneous firms

JEL-codes: F10; F20

6 pages, July 4, 2016

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