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Firm Heterogeneity, Origin of Ownership and Export Participation

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  • Matthew A Cole
  • Robert J R Elliott
  • Supreeya Virakul

Abstract

This paper investigates the relationship between firm heterogeneity and a firm's decision to export, using the annual survey of Thai manufacturing firms from 2001 to 2004. A significant contribution of this paper is that we are, for the first time, able to break down FDI by country of origin to observe whether the behavior of MNEs differs by region of origin. We find that entry sunk costs and firm characteristics are important factors in explaining a firm's decision to export. Another important determinant is the ownership structure of the firm, with foreign owned firms having a higher probability of exporting than domestically owned firms although this differs across country of ownership with potentially important policy implications. Export platform FDI is used to explain the behavior of foreign firms that invest in Thailand. Using three measures of total factor productivity, we also find that highly productive firms self-select into the export market. The implication for governments of developing countries is the need to think carefully about how and to whom they target their inward FDI policies as a means of growth. The heterogeneous behavior of multinationals from different nations means that policies targeting specific regions or countries may be preferable to general tax concessions or the implementation of special economic zones that are open to all.

Suggested Citation

  • Matthew A Cole & Robert J R Elliott & Supreeya Virakul, 2009. "Firm Heterogeneity, Origin of Ownership and Export Participation," Discussion Papers 09-16, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:09-16
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    Cited by:

    1. Predrag D. Radojevic & Darko Marjanovic & Tatjana Radovanov, 2014. "The Impact of Firms' Characteristics on Export Barriers' Perception: A Case of Serbian Exporters," Prague Economic Papers, Prague University of Economics and Business, vol. 2014(4), pages 426-445.
    2. Achim Schmillen, 2016. "The Exporter Wage Premium Reconsidered—Destinations, Distances and Linked Employer–Employee Data," Review of Development Economics, Wiley Blackwell, vol. 20(2), pages 531-546, May.
    3. Matthew Cole, 2011. "Not all trade restrictions are created equally," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(3), pages 411-427, September.
    4. Fabrice Defever & Alejandro Riano, 2017. "Twin peaks," Discussion Papers 2017-15, University of Nottingham, GEP.
    5. Haeng-Sun KIM, 2016. "Firms' leverage and export market participation: Evidence from South Korea," International Economics, CEPII research center, issue 148, pages 41-58.
    6. Rodríguez-Pose, Andrés & Tselios, Vassilis & Winkler, Deborah & Farole, Thomas, 2013. "Geography and the Determinants of Firm Exports in Indonesia," World Development, Elsevier, vol. 44(C), pages 225-240.
    7. Bethuel Kinyanjui Kinuthia, 2017. "Export Spillovers: Comparative Evidence From Kenya and Malaysia," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 26(1), pages 24-51.
    8. Dahai Fu & Yanrui Wu & Yihong Tang, 2012. "Does Innovation Matter for Chinese High-Tech Exports? A Firm-Level Analysis," Frontiers of Economics in China, Higher Education Press, vol. 7(2), pages 218-245, June.
    9. Prabal K. De & Priya Nagaraj, 2017. "Effects of foreign equity participation on recipient firm exports," Applied Economics, Taylor & Francis Journals, vol. 49(31), pages 3100-3113, July.
    10. Ramstetter, Eric D., 2018. "Foreign Ownership and Exports of Thai Manufacturing Plants by Industry in 1996," AGI Working Paper Series 2018-05, Asian Growth Research Institute.
    11. John P. Weche Geluebcke, 2011. "Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics," Working Paper Series in Economics 213, University of Lüneburg, Institute of Economics.
    12. Haeng-Sun Kim, 2016. "Firms’ Leverage and Export Market Participation: Evidence from South Korea," Working Papers halshs-01643899, HAL.

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    More about this item

    Keywords

    FDI; exports; firm heterogeneity; development;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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