Advanced Search
MyIDEAS: Login to save this paper or follow this series

FDI versus Exports Substitutes or Complements? A Three Nations Model and Empirical Evidence

Contents:

Author Info

  • Harald Oberhofer
  • Michael Pfaffermayr

Abstract

There are two main options for companies to serve foreign markets; exports and foreign direct investment (FDI). Based on the Helpman, Melitz and Yeaple (2004) model for two host countries this paper derives a clear theoretical prediction for the decision between both strategies. A bivariate probit model is estimated using AMADEUS database to analyse the probability of using one or the other strategy. The empirical evidence indicates that a considerable number of companies use a combination of both strategies to serve foreign markets, which is in line with the analyzed three country model.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.fiw.at/fileadmin/Documents/Publikationen/Working_Paper/N_012-oberhofer.pdf
File Function: full text
Download Restriction: none

Bibliographic Info

Paper provided by FIW in its series FIW Working Paper series with number 012.

as in new window
Length: 29
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:wsr:wpaper:y:2008:i:012

Contact details of provider:

Order Information:
Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna
Email:

Related research

Keywords: Exports; Foreing Direct Investment; Three Nations Model; Bivariate Probit Estimation;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  2. Andrea M. Leiter & Harald Oberhofer & Paul A. Raschky, . "Productive disasters? Evidence from European firm level data," Working Papers 2007-25, Faculty of Economics and Statistics, University of Innsbruck.
  3. Richard Baldwin, 2005. "Heterogeneous Firms and Trade: Testable and Untestable Properties of the Melitz Model," NBER Working Papers 11471, National Bureau of Economic Research, Inc.
  4. Markusen, James R. & Venables, Anthony J., 2000. "The theory of endowment, intra-industry and multi-national trade," Journal of International Economics, Elsevier, vol. 52(2), pages 209-234, December.
  5. James R. Markusen & Anthony J. Venables, 1995. "Multinational Firms and The New Trade Theory," NBER Working Papers 5036, National Bureau of Economic Research, Inc.
  6. Rafael Rob & Nikolaos Vettas, 2003. "Foreign Direct Investment and Exports with Growing Demand," PIER Working Paper Archive 03-001, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  7. Head, Keith & Ries, John, 2003. "Heterogeneity and the FDI versus export decision of Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 448-467, December.
  8. Keith Head & John Ries, 2004. "Exporting and FDI as Alternative Strategies," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 409-423, Autumn.
  9. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
  10. James B. Davies & Martin G. Kocher & Matthias Sutter, 2008. "Economics research in Canada: a long-run assessment of journal publications," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 22-45, February.
  11. Kocher, Martin G. & Cherry, Todd & Kroll, Stephan & Netzer, Robert J. & Sutter, Matthias, 2008. "Conditional cooperation on three continents," Munich Reprints in Economics 18211, University of Munich, Department of Economics.
  12. Sourafel Girma & Richard Kneller & Mauro Pisu, 2005. "Exports versus FDI: An Empirical Test," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 193-218, July.
  13. Michael Hanke & J?rgen Huber & Michael Kirchler & Matthias Sutter, 2007. "The economic consequences of a Tobin tax - An experimental analysis," Working Papers 2007-18, Faculty of Economics and Statistics, University of Innsbruck.
  14. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  15. Horst, Thomas, 1971. "The Theory of the Multinational Firm: Optimal Behavior under Different Tariff and Tax Rates," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1059-72, Sept.-Oct.
  16. Jesus Crespo Cuaresma & Neil Foster & Johann Scharler, 2007. "Barriers to Technology Adoption, International R&D Spillovers and Growth," Working Papers 2007-09, Faculty of Economics and Statistics, University of Innsbruck.
  17. Inmaculada Martinez-Zarzoso & Celestino Suarez-Burguet, 2005. "Transport costs and trade: Empirical evidence for Latin American imports from the European union," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(3), pages 353-371.
  18. Jaya Prakash Pradhan, 2004. "The determinants of outward foreign direct investment: a firm-level analysis of Indian manufacturing," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 619-639.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Buch, Claudia M. & Kesternich, Iris & Lipponer, Alexander & Schnitzer, Monika, 2010. "Exports Versus FDI Revisited: Does Finance Matter?," CEPR Discussion Papers 7839, C.E.P.R. Discussion Papers.
  2. Raphaël Chiappini, 2011. "FDI and trade: A Granger causality analysis in a heterogeneous panel," Post-Print halshs-00853441, HAL.
  3. Raphaël Chiappini, 2011. "FDI and trade: A Granger causality analysis in a heterogeneous panel," Economics Bulletin, AccessEcon, vol. 31(4), pages 2975-2985.
  4. Martin Falk & Mariya Hake, 2008. "A Panel Data Analysis on FDI and Exports," FIW Research Reports series I-012, FIW.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wsr:wpaper:y:2008:i:012. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.