Working Paper

Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany

Authors

  • Horst Raff
  • Joachim Wagner
Publication Date

We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries.

Info

JEL Classification
F14, F23

Key Words

  • ausländische Direktinvestitionen
  • extensive margins of exports
  • foreign direct investment
  • foreign ownership
  • Germany
  • international trade
  • Internationaler Handel
  • multinational enterprise