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Trade, Multinational Production, and the Gains from Openness

  • Natalia Ramondo
  • Andrés Rodríguez-Clare

This paper quantifies the gains from openness arising from trade and multinational production (MP). We present a model that captures key dimensions of the interaction between these two flows: Trade and MP are competing ways to serve a foreign market; MP relies on imports of intermediate goods from the home country; and foreign affiliates of multinationals can export part of their output. The calibrated model implies that the gains from trade can be twice as high as the gains calculated in trade-only models, while the gains from MP are slightly lower than the gains computed in MP-only models.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15604.

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Date of creation: Dec 2009
Date of revision:
Publication status: published as Natalia Ramondo & Andr�s Rodr�guez-Clare, 2013. "Trade, Multinational Production, and the Gains from Openness," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 273 - 322.
Handle: RePEc:nbr:nberwo:15604
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