The role of foreign firms in domestic exporting
AbstractThis 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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 18486.
Date of creation: Nov 2009
Date of revision:
Export; Foreign Firm; FDI; Spillovers; China;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- F10 - International Economics - - Trade - - - General
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-INT-2009-11-14 (International Trade)
- NEP-TRA-2009-11-14 (Transition Economics)
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