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The effect of exchange rates on firm exports and the role of FDI

  • David Greenaway


  • Richard Kneller
  • Xufei Zhang

This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multinationals have at their disposal a greater array of instruments to deal with exchange rates changes, although their use may vary according to the motives behind FDI. We also find important differences according to the country of origin of multinational firms. Multinationals firms originating from outside of the EU are less affected by changes in the exchange rate compared to those inside, who appear similarly affected as domestic firms. Copyright Kiel Institute 2012

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Article provided by Springer & Institut für Weltwirtschaft (Kiel Institute for the World Economy) in its journal Review of World Economics.

Volume (Year): 148 (2012)
Issue (Month): 3 (September)
Pages: 425-447

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Handle: RePEc:spr:weltar:v:148:y:2012:i:3:p:425-447
DOI: 10.1007/s10290-012-0129-y
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