IDEAS home Printed from
   My bibliography  Save this paper

Export and direct investment as a signal in global markets


  • Arijit Mukherjee

    () (Department of Economics, Keele University, Keele,)

  • Udo Broll

    (University of Saarland, Germany)


This paper examines the production strategies of an international firm. We show that foreign direct investment acts as a signal to overcome an asymmetric information problem in the host-country. We find that a host-country will prefer a situation where a technologically superior (inferior) firm does direct investment (export) compared to the situations where all or neither types of foreign firms are investing abroad. Since, the technologically superior (inferior) firm does direct investment (export) for moderate cost of direct investment, this finding suggests higher host-country welfare for moderate cost of direct investment compared to very small or very large costs of direct investment.

Suggested Citation

  • Arijit Mukherjee & Udo Broll, 2001. "Export and direct investment as a signal in global markets," Keele Department of Economics Discussion Papers (1995-2001) 2001/09, Department of Economics, Keele University.
  • Handle: RePEc:kee:keeldp:2001/09

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Asymmetric information; Export; Foreign direct investment;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kee:keeldp:2001/09. 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: (Martin E. Diedrich). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.