In analyzing firm entry and exit across Belgian manufacturing industries,
this paper presents evidence that import competition and foreign direct
investment discourage entry and stimulate exit of domestic entrepreneurs.
These results are in line with theoretical occupational choice models
that predict foreign direct investment would crowd out domestic
entrepreneurs through their selections in product and labor markets.
However, the empirical results also suggest that this crowding out effect
may ...
In analyzing firm entry and exit across Belgian manufacturing industries,
this paper presents evidence that import competition and foreign direct
investment discourage entry and stimulate exit of domestic entrepreneurs.
These results are in line with theoretical occupational choice models
that predict foreign direct investment would crowd out domestic
entrepreneurs through their selections in product and labor markets.
However, the empirical results also suggest that this crowding out effect
may be moderated or even reversed in the long-run due to the long term
positive effects of FDI on domestic entrpreneurship as a result of
learning, demonstration, networking and linkage effects between foreign
and domestic firms.
+