Trade, Multinational Sales, and FDI in a Three-factor Model
AbstractThe overwhelming importance of multinational activities as well as the coexistence of exporters and multinationals within the developed countries demand for theoretical models which provide a convincing explanation of simultaneous two-way trade and horizontal multinational activities. We present a model with three factors of production to disentangle the two-fold role of headquarters for their affiliates into a know-how (headquarters services) and a capital-serving part (FDI). We simulate the model to derive predictions about the impact of trade costs, plant set-up costs, fixed multinational network costs, relative country size and factor endowments on exports, multinational sales and FDI. The effects are not uniform for multinational sales and FDI. Whereas exports and affiliate sales increase with the similarity in country size, FDI is more likely to increase monotonously with the sending country's size. 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): 4 (09)
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Other versions of this item:
- Peter Egger & Michael Pfaffermayr, 2000. "Trade, multinational sales, and FDI in a three-factors model," Economics working papers 2000-13, Department of Economics, Johannes Kepler University Linz, Austria.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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- Carmen Fillat Castejón & Joseph F. Francois & Julia Woerz, 2008.
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- Badinger Harald & Peter Egger, 2013. "Spacey Parents and Spacey Hosts in FDI," Department of Economics Working Papers wuwp154, Vienna University of Economics, Department of Economics.
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