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The role of foreign firms in domestic exporting

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  • Sun, Sizhong

Abstract

This paper investigates the impact of foreign firms on exports of domestic exporting firms. We show that domestic firms respond to an increase in the presence of foreign firms by increasing their exports, despite the increase in foreign presence can drive up the production cost and make domestic market more profitable. This hypothesis is then tested in China, where we find a 1 per cent increase in foreign presence causes domestic firms to increase their exports by 0.74 per cent. This finding sheds light on understanding China’s massive exports and fast inflow of foreign investment observed in the past three decades.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18486.

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Date of creation: Nov 2009
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Handle: RePEc:pra:mprapa:18486

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Keywords: Export; Foreign Firm; FDI; Spillovers; China;

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