Domestic Repercussions of Different Types of FDI

Firm-level Evidence for Taiwanese Manufacturing

This paper assesses the fear that outward foreign direct investment (FDI) undermines domestic manufacturing and displaces local workers. Drawing on firm-specific data on Taiwanese multinationals, the authors examine whether repercussions at home depend on the size, location and type of outward FDI. They find that the probability of negative effects increases slightly with the size of FDI. The effects of locating in China differ from those of locating in advanced countries not only in size but also in sign.

Download: