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Export-Platform FDI: Cannibalization or Complementarity?

Author

Listed:
  • Pol Antràs
  • Evgenii Fadeev
  • Teresa C. Fort
  • Felix Tintelnot

Abstract

We develop a model of export-platform foreign direct investment (FDI) in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.

Suggested Citation

  • Pol Antràs & Evgenii Fadeev & Teresa C. Fort & Felix Tintelnot, 2024. "Export-Platform FDI: Cannibalization or Complementarity?," NBER Working Papers 32081, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32081
    Note: ITI
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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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