DETERMINANTS OF GERMAN MANUFACTURING DIRECT-INVESTMENT - 1980-1988

This paper examines what economic variables best explain the pattern o f German foreign direct investment in five manufacturing sectors for t he period 1980 through 1988. The statistical model also yields estimat es of country-specific fixed effects. The results indicate that host-c ountry size and labor costs may help explain German FDI. The data also suggest that substantial differences among the five sectors exist. Th e results indicate that geographical proximity to Germany may help sys tematically in attracting investment.