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Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany

  • Raff, Horst


    (Christian-Albrechts-University of Kiel, Kiel Institute for the World Economy and CESifo)

  • Wagner, Joachim


    (Leuphana University Lueneburg, CESIS, Royal Institute of Technology, Stockholm)

We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 317.

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Length: 24 pages
Date of creation: 12 Jun 2013
Date of revision:
Handle: RePEc:hhs:cesisp:0317
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
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  1. Horst Raff & Natalia Trofimenko, 2014. "World Market Access of Emerging-Market Firms: The Role of Foreign Ownership and Access to External Finance," Working Paper Series in Economics 325, University of Lüneburg, Institute of Economics.
  2. Foster, Lucia & Haltiwanger, John C. & Syverson, Chad, 2005. "Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?," IZA Discussion Papers 1705, Institute for the Study of Labor (IZA).
  3. Eric J. Bartelsman & Mark Doms, 2000. "Understanding productivity: lessons from longitudinal microdata," Finance and Economics Discussion Series 2000-19, Board of Governors of the Federal Reserve System (U.S.).
  4. John P. Weche Geluebcke, 2011. "The Performance of Foreign Affiliates in German Manufacturing: Evidence from a new Database," Working Paper Series in Economics 216, University of Lüneburg, Institute of Economics.
  5. Maria Guadalupe & Olga Kuzmina & Catherine Thomas, 2010. "Innovation and Foreign Ownership," NBER Working Papers 16573, National Bureau of Economic Research, Inc.
  6. repec:cii:cepiei:2012-q4-132-4 is not listed on IDEAS
  7. Joachim Wagner, 2008. "A note on why more West than East German firms export," International Economics and Economic Policy, Springer, vol. 5(4), pages 363-370, December.
  8. Sourafel Girma & Yundan Gong & Holger Görg, 2008. "Foreign Direct Investment, Access to Finance, and Innovation Activity in Chinese Enterprises," World Bank Economic Review, World Bank Group, vol. 22(2), pages 367-382, June.
  9. Kalina Manova & Zhiwei Zhang, 2008. "China's exporters and importers: firms, products, and trade partners," Working Paper Series 2008-28, Federal Reserve Bank of San Francisco.
  10. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
  11. Raff, Horst & Ryan, Michael & Stähler, Frank, 2009. "Whole vs. shared ownership of foreign affiliates," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 572-581, September.
  12. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-65, June.
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