Export vs. FDI Behavior of Heterogenous Firms in Heterogenous Markets: Evidence from Sovenia
AbstractThis 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.
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Bibliographic InfoPaper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 14704.
Length: 35 pages
Date of creation: 2004
Date of revision:
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More information through EDIRC
Foreign Direct Investment; Exports; FirmHeterogeneity; Multinational Firm;
Find related papers by 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-07-04 (All new papers)
- NEP-IFN-2004-07-04 (International Finance)
- NEP-TRA-2004-07-04 (Transition Economics)
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