Abstract: When a multinational firm invests abroad, it can either establish a new facility (greenfield investment, GF) or purchase a local firm (cross-border merger and acquisition, M&A). Using a novel US firm-level dataset, I provide the first evidence that multinationals with higher levels of intangible capital systematically invest through GF rather than M&A. Motivated by this empirical result, I develop a general equilibrium search model of a multinational firm’s choice between M&A and GF. The model implies that equilibrium FDI patterns can be suboptimal. In particular, policymakers in less developed economies can increase welfare by incentivizing M&A. By allowing highly productive multinationals to use local intangible capital, this policy raises aggregate productivity relative to the laissez-faire outcome.

Abstract: Many countries seek to attract foreign travelers. How do direct flight connections affect the spending of international visitors? A novel dataset on card payments made by Chinese travelers through point-of-sale (POS) terminals enables us to investigate that question. We instrument for the frequency of direct flights between Chinese cities and foreign countries by exploiting overseas airport expansions as exogenous shocks. Our IV estimates indicate that a 1% increase in the weekly frequency of direct flights leads to a 2% increase in cross-border card transaction value. This suggests that in a city with the average frequency, adding one extra weekly direct flight increases the value of transactions by 52% to the destination country. While improving air connectivity promotes international travel, we find that negative shocks to consumer preferences for destination countries, such as boycotts, diminish the positive impact of air connectivity.

Abstract: Using US census data, I investigate how much Japanese automobile firms' investments contributed to local wage increases over the 1980s. My difference-in-differences estimation shows that the effect is not significant with a whole sample, but different by race. In particular, Black workers experienced a 9.3 percent wage decrease in areas where a Japanese assembly plant opened, and I consistently observed the negative effects in regressions with other specifications. My analysis also suggests a regional difference in the wage increase, and auto workers in the West experienced a larger wage increase than workers in the other regions.