Export Versus FDI in Services
In the literature on exports and investment, most productive firms are seen to invest abroad. In the Helpman et al. (2004) model, costs of transportation play a critical role in the decision about whether to serve foreign customers by exporting, or by producing abroad. We consider the case of tradable services, where the marginal cost of transport is near zero. We argue that in the purchase of services, buyers face uncertainty about product quality, especially when production is located far away. Firm optimisation then leads less productive firms to self-select themselves for FDI. We test this prediction with data from the Indian software industry and find support for it.
|Date of creation:||01 Dec 2010|
|Date of revision:|
|Contact details of provider:|| Postal: International Monetary Fund, Washington, DC USA|
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tomiura, Eiichi, 2007.
"Foreign outsourcing, exporting, and FDI: A productivity comparison at the firm level,"
Journal of International Economics,
Elsevier, vol. 72(1), pages 113-127, May.
- Eiichi Tomiura, 2005. "Foreign Outsourcing, Exporting, and FDI: A Productivity Comparison at the Firm Level," Discussion Paper Series 168, Research Institute for Economics & Business Administration, Kobe University.
- Asish Arora & Alfonso Gambardella, 2004.
"The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries,"
NBER Working Papers
10538, National Bureau of Economic Research, Inc.
- Ashish Arora & Alfonso Gambardella, 2005. "The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries," NBER Chapters, in: Innovation Policy and the Economy, Volume 5, pages 1-32 National Bureau of Economic Research, Inc.
- Ajay Shah & Ila Patnaik & Dilek Demirbas, 2010.
"Graduating to Globalisation: A Study of Southern Multinationals,"
- Dilek Demirbas & Ila Patnaik & Ajay Shah, 2013. "Graduating to globalisation: a study of Southern multinationals," Indian Growth and Development Review, Emerald Group Publishing, vol. 6(2), pages 242 - 259, October.
- Demirbas, Dilek & Patnaik, Ila & Shah, Ajay, 2010. "Graduating to globalisation: A study of southern multinationals," Working Papers 10/65, National Institute of Public Finance and Policy.
- Dilek Demirbas & Ila Patnaik & Ajay Shah, 2010. "Graduating to Globalisation : A Study of Southern Multinationals," Finance Working Papers 21854, East Asian Bureau of Economic Research.
- Sourafel Girma & David Greenaway & Richard Kneller, 2004. "Does Exporting Increase Productivity? A Microeconometric Analysis of Matched Firms," Review of International Economics, Wiley Blackwell, vol. 12(5), pages 855-866, November.
- Fukunari Kimura & Kozo Kiyota, 2006. "Exports, FDI, and Productivity: Dynamic Evidence from Japanese Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(4), pages 695-719, December.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/290. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow)or (Hassan Zaidi)
If references are entirely missing, you can add them using this form.