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Firm Heterogeneity, Origin of Ownership and Export Participation

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  • Matthew A Cole
  • Robert J R Elliott
  • Supreeya Virakul

Abstract

This paper investigates the relationship between firm heterogeneity and a firm's decision to export, using the annual survey of Thai manufacturing firms from 2001 to 2004. A significant contribution of this paper is that we are, for the first time, able to break down FDI by country of origin to observe whether the behavior of MNEs differs by region of origin. We find that entry sunk costs and firm characteristics are important factors in explaining a firm's decision to export. Another important determinant is the ownership structure of the firm, with foreign owned firms having a higher probability of exporting than domestically owned firms although this differs across country of ownership with potentially important policy implications. Export platform FDI is used to explain the behavior of foreign firms that invest in Thailand. Using three measures of total factor productivity, we also find that highly productive firms self-select into the export market. The implication for governments of developing countries is the need to think carefully about how and to whom they target their inward FDI policies as a means of growth. The heterogeneous behavior of multinationals from different nations means that policies targeting specific regions or countries may be preferable to general tax concessions or the implementation of special economic zones that are open to all.

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Bibliographic Info

Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 09-16.

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Length: 34 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:bir:birmec:09-16

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Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk
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Keywords: FDI; exports; firm heterogeneity; development;

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References

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Citations

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Cited by:
  1. Fu, Dahai & Wu, Yanrui & Tang, Yihong, 2010. "Does innovation matter for Chinese hightech exports? a firm-level analysis," MPRA Paper 30012, University Library of Munich, Germany.
  2. John P. Weche Geluebcke, 2011. "Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics," Working Paper Series in Economics 213, University of Lüneburg, Institute of Economics.
  3. Achim Schmillen, 2011. "The Exporter Wage Premium Reconsidered Destinations, Distances and Linked Employer-Employee Data," Working Papers 305, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).
  4. Farole, Thomas & Rodríguez-Pose, Andrés & Tselios, Vassilis & Winkler, Deborah, 2013. "Geography and the Determinants of Firm Exports in Indonesia," CEPR Discussion Papers 9342, C.E.P.R. Discussion Papers.

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