Does North-South Integration Affect Multinational Firms' Strategies?
AbstractThis paper aims to develop a theoretical model that shows how a firm's decision to make a foreign direct investment is influenced by a North-South regional economic integration. Our results suggest that tariff-jumping and export-platform strategies depend on a tradeoff between variable trade costs and fixed costs, in addition to wage differences. Furthermore, insiders may affect the strategic location of outsiders by dampening the market accessibility advantages induced by the trade liberalization process, which results in an eviction of the outsiders from the area. This effect, however, depends heavily on the level of fixed costs. Indeed, a decrease in the costs of implanting in the low-wage country gives the insiders a first-mover advantage that allows them to later evict their competitors. Copyright Blackwell Publishing Ltd 2005..
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of International Economics.
Volume (Year): 13 (2005)
Issue (Month): 3 (08)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576
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- Huu Thanh Tam Nguyen & Nguyen Khac, 2013. "Demand creation and competition effect of Export-platform FDI on backward linkages - Evidence from panel data analysis of Vietnamese supporting industries," Documents de recherche 13-02, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
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