Home country effects of internationalization on market dynamics, firm level employment and total factor productivity in Europe

We analyze the important channel of inter-industry effects of internationalization that the existing literatur has neglected. We consider two types of internationalization: offshoring (sourcing inputs from foreign suppliers) and outward foreign direct investment (relocation of production stages abroad to an affiliated entity). We analyze the impact of inter-industry effectsz of inernationalization on home country firms' i) employment, ii) total factor productivity, and iii) exit probability.