Firm Size and Foreign Direct Investment

Magnus Blomstrom, Robert E. Lipsey

NBER Working Paper No. 2092 (Also Reprint No. r1632)
Issued in October 1991
NBER Program(s):   ITI   IFM

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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Published: "Firm Size and Foreign Operation of Multinationals." From The Scandinavian Journal of Economics, Vol. 93, No. 1, pp. 101-107, (1991).

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