Multi-Product Firms and Exporting: A Developing Country Perspective

In this paper, we shed additional light on the complex relationship between multinational enterprises (MNEs), exporting and economic development by making a distinction between single and multi-product firms. As far as we are aware, the export behavior of foreign firms in a multi-product setting has not previously been considered for a developing country. Using firm-level data for Thailand we show that the number of goods produced causes a much larger variation in exports volumes than in total production. Whilst the number of products exported and the total volume exported is positively correlated we find, in contrast to US studies, a surprising negative correlation between the number of products produced and the volume of production. We then go on to investigate for the first time the characteristics of multi-product firms and the number of products they produce and find the distinction between foreign owned and domestic firms as well as between foreign exporters and foreign non-exporters is important. The presence of foreign firms producing single products solely for the domestic market as well as those producing many products for export demonstrates the diversity of behavior of foreign firms in developing countries and emphasises that a foreign presence may not be as beneficial as policy makers are led to believe.