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Multinational Production, Exports and Aggregate Productivity

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  • Joel Rodrigue

    (Vanderbilt University)

Abstract

This paper presents and estimates a dynamic model of multinational production (MP) and exports with heterogeneous firms. The model highlights the interaction between firms' location and export decisions and their effect on aggregate productivity. The model is structurally estimated using firm-level Indonesian manufacturing data. The results are broadly consistent with the pattern of productivity, exports and MP across firms. Counterfactual experiments suggest that there are substantial productivity gains due to international trade and MP. The implied changes in steady state real wages, however, are relatively small. The experiments emphasize that the nature of firm-level trade and MP interactions are crucial to determining the aggregate effects of trade and foreign direct investment policy. (Copyright: Elsevier)

Suggested Citation

  • Joel Rodrigue, 2014. "Multinational Production, Exports and Aggregate Productivity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(2), pages 243-261, April.
  • Handle: RePEc:red:issued:12-23
    DOI: 10.1016/j.red.2013.08.002
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    Cited by:

    1. Yuko Imura, 2019. "Reassessing Trade Barriers with Global Value Chains," Staff Working Papers 19-19, Bank of Canada.
    2. Wu, Tommy T., 2015. "Firm heterogeneity, trade, multinationals, and growth: A quantitative evaluation," Journal of International Economics, Elsevier, vol. 97(2), pages 359-375.
    3. Felix Tintelnot, 2017. "Global Production with Export Platforms," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 157-209.
    4. Contessi, Silvio, 2015. "Multinational firms׳ entry and productivity: Some aggregate implications of firm-level heterogeneity," Journal of Economic Dynamics and Control, Elsevier, vol. 61(C), pages 61-80.
    5. JaeBin Ahn & Alexander F. McQuoid, 2017. "Capacity Constrained Exporters: Identifying Increasing Marginal Cost," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1175-1191, July.
    6. Ziran Ding, 2022. "Firm heterogeneity, variable markups, and multinational production: A review from trade policy perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1311-1357, December.
    7. Ziran Ding, 2022. "Firm heterogeneity, variable markups, and multinational production: A review from trade policy perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 36(5), pages 1311-1357, December.

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    More about this item

    Keywords

    Exports; Multinational production; Foreign direct investment; Firm heterogeneity; Aggregate productivity; Resource allocation; Indonesia;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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