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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- Peter Egger & Michael Pfaffermayr, 2004.
"Distance, trade and FDI: a Hausman-Taylor SUR approach,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 19(2), pages 227-246.
- Peter Egger & Michael Pfaffermayr, 2001. "Distance, Trade and FDI: A Hausman-Taylor SUR Approach," WIFO Working Papers 164, WIFO.
- Giorgia Giovannetti & Marco Sanfilippo, 2009. "Do Chinese Exports Crowd-out African Goods? An Econometric Analysis by Country and Sector," The European Journal of Development Research, Palgrave Macmillan, vol. 21(4), pages 506-530, September.
- Yeboah, Osei-Agyeman & Appiah-Danquah, Gloria, 2012. "Chinese Market Access Barriers of U.S Oilseeds and Grains," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119794, Southern Agricultural Economics Association.
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WIFO Working Papers
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- Xu, WeiGuo & Hu, DaiPing & Lei, AiZhong & Shen, HuiZhang, 2008. "FDI chaos and control in China," Research in International Business and Finance, Elsevier, vol. 22(1), pages 17-28, January.
- Carmen Fillat-Castej—n & Joseph Francois & Julia Woerz, 2008.
"TRADE THROUGH FDI: investing in services,"
IIDE Discussion Papers
20080502, Institue for International and Development Economics.
- 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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