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Export vs. FDI Behavior of Heterogenous Firms in Heterogenous Markets: Evidence from Sovenia

Author

Listed:
  • Joze P. Damijan
  • Marko Glaznar
  • Janez Prasnikar
  • Saso Polanec

Abstract

This paper adds a new dimension to the recent literature on relationship beween firm's heterogeneity in terms of total factor productivity and its dynamic exports vs. FDI decision, namely the heterogeneity of export markets. We show that higher productivity of investing firms relative to just exporters is not inevitably uniform. Exploiting a complete set of Slovenian exporting firms in the period 1994 - 2002, we confirm the tendency of higher productivity firms to engage in FDI only for FDI conducted in high wage countries. In addition, we find no evidence in favor of either market-seeking (horizontal) or factor-seeking (vertical) motive for FDI. While survey results suggest trade-promotion motive to be just as important, we find little evidence in favor of efficiency of this strategy.

Suggested Citation

  • Joze P. Damijan & Marko Glaznar & Janez Prasnikar & Saso Polanec, 2004. "Export vs. FDI Behavior of Heterogenous Firms in Heterogenous Markets: Evidence from Sovenia," LICOS Discussion Papers 14704, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    • Handle: RePEc:lic:licosd:14704
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    File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp147.pdf
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    References listed on IDEAS

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    Cited by:

    1. Jože P. Damijan & Sašo Polanec & Janez Prašnikar, 2007. "Outward FDI and Productivity: Micro‐evidence from Slovenia," The World Economy, Wiley Blackwell, vol. 30(1), pages 135-155, January.
    2. De Loecker, Jan & Konings, Jozef, 2006. "Job reallocation and productivity growth in a post-socialist economy: Evidence from Slovenian manufacturing," European Journal of Political Economy, Elsevier, vol. 22(2), pages 388-408, June.
    3. Cebeci, Tolga, 2014. "Impact of export destinations on firm performance," Policy Research Working Paper Series 6743, The World Bank.

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    More about this item

    Keywords

    Foreign Direct Investment; Exports; FirmHeterogeneity; Multinational Firm;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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