HENNING MÜHLEN
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Research


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My focus is on empirical research.

In my current work, I am studying aspects of globalization and  economic development. For example, I am contributing to the question:
  • What is the role of multinational firms' activities in structural change?​ ​

​Some of my work has a regional focus on countries in Africa. For example:
  • What is the role of structural change in productivity growth in Africa?

Scroll down to find details on my working papers and publications.

Working papers



Decomposing a Decomposition: Within-Country Differences and the Role of Structural Change in Productivity Growth
​

​joint with Octavio Escobar
​
Hohenheim Discussion Papers in Business, Economics and Social Sciences, 2019, No. 05-2019, Institute of Economics, University of Hohenheim
​

PDF - working paper
Details
​In this article, we investigate the relevance of structural change in country-wide productivity growth considering within-country differences. For this purpose, we propose a two-step decomposition approach that accounts for heterogeneity among subnational units. In this regard, we consider structural change in terms of a labor reallocation across sectors. To highlight the relevance of our procedure compared to the prevalent decomposition approach in the existing development literature (which usually neglects subnational differences), we show an application with data for the Mexican economy. Specifically, we contrast findings obtained from country-sector data on the one hand with those obtained from (more disaggregated) state-sector data on the other hand. The results of the two approaches differ substantially - in quantitative and qualitative terms. While the prevalent approach suggests a (moderate) growth-enhancing effect of structural change between 2005 and 2016, our two-step procedure reveals that structural change appeared to be growth-reducing during that period. An extension of our decomposition suggests that this negative effect is mainly driven by the reallocation of low-skilled labor within subnational units (i.e. within Mexican states). Finally, our work illustrates the relevance of potential heterogeneity within a country while analyzing country-wide dynamics such as the structural change process. 


Firm-Level Productivity Spillovers from FDI in Latin American Countries
​

IEE Working Paper Series, 2013, No. 196, Institute of Development Research and Development Policy at the Ruhr-University Bochum
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PDF - working paper
Foreign direct investment (FDI) projects are assumed to be accompanied by potential external effects (so-called FDI spillovers) which are supposed to affect productivity levels of other firms in a host country. Empirical results on this topic are inconclusive and most studies focus on one country. I contribute to the literature by employing comparable firm-level panel data from ten Latin American (developing) countries in order to estimate the spillover effects from FDI on firms' productivity levels. The impact is assessed as an average effect for the full set of countries as well as for each economy separately. The results indicate that there is a small negative spillover effect from foreign presence within industries across Latin American countries. Furthermore, I find that the negative intra-industry spillover is caused by wholly owned foreign affiliates. The country-specific investigation indicates that the spillover effects differ between the considered economies with a tendency that the presence of FDI in a sector (region) has a negative (positive) impact.

Publications
​(peer-reviewed articles)



The Role of FDI in Structural Change: Evidence from Mexico
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joint with Octavio Escobar

The World Economy, 2020, Vol. 43, No. 3, pp. 557-585
​
Link:
doi.org/10.1111/twec.12879

Open access article
Foreign direct investment (FDI) flows to Mexico are substantial and play an important role in the Mexican economy since the mid-1990s. These investments reflect the activities of multinational firms that shape to some extent the economic landscape and sectoral structure in this host country. We illustrate that there is considerable variation in the amounts of FDI and structural change within the country and across time. Based on this, the paper's main purpose is to analyze whether there is a significant impact of FDI on structural change. We conduct an empirical analysis covering the period 2006-2016. We use the fixed-effects estimator where the unit of observation is a Mexican state for which we calculate structural change from the reallocation of labor between sectors. The results suggest that (if any) there is a positive effect from FDI on growth-enhancing structural change. This effect depends critically on the lag structure of FDI. Moreover, there is some evidence that the positive effect (i) arises from FDI flows in the industry sector and (ii) is present for medium- and low-skilled labor reallocation.


​Structural Transformation and its Relevance for Economic Growth in Sub-Saharan Africa
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joint with Matthias Busse and Ceren Erdogan

Review of Development Economics, 2019, Vol. 23, No. 1, pp. 33-53
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Link: doi.org/10.1111/rode.12543
In this paper, we analyze the role of structural transformation in view of the remarkable growth performance of Sub‐Saharan African countries since the late 1990s. Our analysis covers 41 African countries over the period 1980 to 2014 and accounts for structural transformation by employing the analytical frameworks of (i) growth decomposition and (ii) growth regression. Even though the low‐productive agricultural sector continues to employ most of the African workforce, our results reveal that structural transformation has taken place and that it has contributed significantly to African growth in the period 1980‐2014.


China's Impact on Africa - The Role of Trade, FDI and Aid
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joint with Matthias Busse and Ceren Erdogan

Kyklos, 2016, Vol. 69, No. 2, pp. 228-262
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Link: doi.org/10.1111/kykl.12110
This paper investigates the impact of Chinese activities in sub‐Saharan African countries with respect to the growth performance of economies in that region. Using a Solow‐type growth model and panel data for the period 1991 to 2010, we find that African economies that export natural resources have benefited from positive terms‐of‐trade effects. In addition, there is evidence for displacement effects of African firms due to competition from China. On the other hand, Chinese foreign investment and aid in Africa does not appear to have a significant impact on African growth.


FDI by Early Movers, Followers and Latecomers: Timing of Entry by German Firms during Transition in the Czech Republic
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joint with Peter Nunnenkamp

Applied Economics Letters, 2011, Vol. 18, No. 18, pp. 1729-1734
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Link: ​doi.org/10.1080/13504851.2011.562149

​Link to long version: Working paper (with more details)
We analyse Foreign Direct Investment (FDI) decisions by German firms with and without affiliates in the Czech Republic at different stages of transition. We find that FDI entry strongly depends on firm productivity immediately after the political and economic regime change, but less so with diminishing uncertainty. Likewise, distance-related transaction costs discourage FDI by latecomers considerably less than FDI by early movers.


FDI Liberalization, Firm Heterogeneity and Foreign Ownership: German Firm Decisions in Reforming India
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joint with Holger Görg and Peter Nunnenkamp

Journal of Development Studies, 2010, Vol. 46, No. 8, pp. 1367-1384
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Link: ​​doi.org/10.1080/00220380903318053
The paper investigates the role of firm-level productivity and industry-level R&D for multinational enterprises' (MNEs') choice of undertaking foreign direct investment (FDI), and the share of ownership in foreign affiliates. Two firm-specific datasets on German MNEs with varying equity stakes in Indian affiliates are used to account for the two-step decision process. The paper also analyses how German firm decisions were affected by the liberalisation of FDI regulations in India. Results show remarkable differences between the selection and the ownership share equation, and also between the pre-reform and post-reform periods. The evidence clearly reveals the trade-offs involved in selective FDI approvals and foreign ownership restrictions.


Firm Heterogeneity, Industry Characteristics and Types of FDI: The Case of German FDI in the Czech Republic

joint with Holger Görg and Peter Nunnenkamp

Aussenwirtschaft, 2010, Vol. 65, No. 3, pp. 273-295
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Link to pdf
In addition to firm and industry characteristics, the heterogeneity of foreign direct investment (FDI) has to be taken into account when analyzing the determinants of outward FDI. We combine two firm-specific datasets on German firms with subsidiaries and joint ventures in the Czech Republic, compared to a control group of German firms without FDI in this host country. The impact of firm and industry characteristics on FDI decisions is assessed by estimating two-step Heckman models. We find that larger, more productive and more experienced firms are more likely to invest in the Czech Republic. Firm characteristics also affect the size of FDI. However, the relevance of firm and industry characteristics differs between the manufacturing and services sectors and depends on whether FDI is horizontal or vertical.
If you have any questions or feedback with respect to my research, don't hesitate to contact me. 
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