A matter of life and death? Knowledge intensity of FDI activities and domestic enterprise

Abstract

There is no overall agreement on the relationship between foreign direct investment (FDI) and domestic enterprise, this may reflect different effects from various types of FDI. A panel data regression approach is adopted to examine the impact of knowledge intensive FDI on both new firm formation and the deaths of enterprises. Jobs created by FDI are found to not influence firm births, but influence domestic enterprise through deaths. Renewal knowledge intensive activities reduce firm deaths, but routine or compliance knowledge intensive activities increase the death rate. This means policy seeking to attract FDI must distinguish even within different types of knowledge intensive activities.