Foreign Direct Investment in Services

The IAW cooperates in this joint project with Jörn Kleinert (University of Tübingen), Farid Toubal (University of Angers) and Horst Raff (University of Kiel). In contrast to manufacturing, economic analysis of cross-border activities in the service sector is scarce. To fill this gap, we develop new theories that build a base for the empirical analyses of firm-level determinants and effects of multinational activities in the service sector.

The project focuses on the following issues: In the first part, we analyse the role of services within the multinational firm. There are many services that shape the organisational form of a multinational firm. Using detailed data at the firm level, we first analyse the drivers behind management services, wholesale and distribution services, and transport activities. Second, we focus on the internalisation decision of services activities. We analyse the firm-specific determinants of offshoring but also focus on country-specific factors that explain the acquisition of essential service functions from outside parties.