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Exports, relational specificity and new investment locations

Author

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  • Giovannetti, Giorgia
  • Santoni, Gianluca
  • Vannelli, Giulio

Abstract

This paper examines how past bilateral exports shape firms’ choices of new foreign-investment locations using detailed administrative data on French manufacturers. We document three facts: (i) destinations with larger lagged bilateral exports are more likely to be selected; (ii) exports do not decline after entry and instead on average rise; and (iii) conditional on export value, entry is more likely where the firm sells products with higher relationship stickiness (Martin et al., 2026). We estimate a discrete-choice PPML model with firm-year and country-year fixed effects, restricting each firm’s choice set to destinations without prior affiliates. Empirically, a 10% increase in lagged exports is associated with a 3.4% higher probability of selecting that destination. Additionally, having at least one product in the top quartile of stickiness corresponds to about a 2.2 times higher entry odds, conditional on value. The results are quantitatively similar under alternative fixed-effects structures, sample definitions, and instrumental variables estimators.

Suggested Citation

  • Giovannetti, Giorgia & Santoni, Gianluca & Vannelli, Giulio, 2026. "Exports, relational specificity and new investment locations," European Economic Review, Elsevier, vol. 186(C).
    • Handle: RePEc:eee:eecrev:v:186:y:2026:i:c:s0014292126000723
    DOI: 10.1016/j.euroecorev.2026.105328
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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