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Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany

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  • Horst Raff
  • Joachim Wagner

Abstract

We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1845.

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Length: 23 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:kie:kieliw:1845

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Keywords: international trade; foreign ownership; multinational enterprise; foreign direct investment; extensive margins of exports; Germany;

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  1. Guadalupe, Maria & Kuzmina, Olga & Thomas, Catherine, 2010. "Innovation and Foreign Ownership," CEPR Discussion Papers 8141, C.E.P.R. Discussion Papers.
  2. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
  3. Lucia Foster & John Haltiwanger & Chad Syverson, 2008. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," American Economic Review, American Economic Association, vol. 98(1), pages 394-425, March.
  4. Kalina Manova & Zhiwei Zhang, 2009. "China's Exporters and Importers: Firms, Products and Trade Partners," NBER Working Papers 15249, National Bureau of Economic Research, Inc.
  5. Sourafel Girma & Yundan Gong & Holger Görg, 2008. "Foreign direct investment, access to finance, and innovation activity in Chinese enterprises," Kiel Working Papers 1400, Kiel Institute for the World Economy.
  6. Joachim Wagner, 2008. "A note on why more West than East German firms export," International Economics and Economic Policy, Springer, vol. 5(4), pages 363-370, December.
  7. Horst Raff & Natalia Trofimenko, 2013. "World Market Access of Emerging-Market Firms: The Role of Foreign Ownership and Access to External Finance," CESifo Working Paper Series 4346, CESifo Group Munich.
  8. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  9. Raff, Horst & Ryan, Michael & Stähler, Frank, 2009. "Whole vs. shared ownership of foreign affiliates," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 572-581, September.
  10. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-65, June.
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Cited by:
  1. Horst Raff & Natalia Trofimenko, 2013. "World Market Access of Emerging-Market Firms: The Role of Foreign Ownership and Access to External Finance," CESifo Working Paper Series 4346, CESifo Group Munich.

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