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Time Zones and FDI with Heterogeneous Firms

Author

Listed:
  • Kikuchi, Toru
  • Marjit, Sugata
  • Mandal, Biswajit

Abstract

Based on Helpman et al. (2004) we propose a simple two-country (Home and Foreign) model with heterogeneous firms to capture the role of FDI via utilizing time zone differences. Two countries are located in different time zones and there is no overlap in daily working hours. It will be shown that productivities of the firms undertaking FDI are higher than the productivities of non-FDI firms. Although the results look quite similar with Helpman et al. (2004), the direction of service trade flow is totally different: Foreign subsidiaries of high- productivity firms serve the Home market.

Suggested Citation

  • Kikuchi, Toru & Marjit, Sugata & Mandal, Biswajit, 2015. "Time Zones and FDI with Heterogeneous Firms," MPRA Paper 68223, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:68223
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    References listed on IDEAS

    as
    1. Elisabeth Christen, 2017. "Time Zones Matter: The Impact of Distance and Time Zones on Services Trade," The World Economy, Wiley Blackwell, vol. 40(3), pages 612-631, March.
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    3. Elhanan Helpman & Marc J. Melitz & Stephen R. Yeaple, 2003. "Export versus FDI," NBER Working Papers 9439, National Bureau of Economic Research, Inc.
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    7. Ronald W. Jones & Sugata Marjit, 2018. "The Role of International Fragmentation in the Development Process," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 15, pages 255-261, World Scientific Publishing Co. Pte. Ltd..
    8. Toru Kikuchi & Sugata Marjit & Biswajit Mandal, 2013. "Trade with Time Zone Differences: Factor Market Implications," Review of Development Economics, Wiley Blackwell, vol. 17(4), pages 699-711, November.
    9. Marjit, Sugata, 2007. "Trade theory and the role of time zones," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 153-160.
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    12. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
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    More about this item

    Keywords

    Time Zones; FDI; Heterogeneous Firms;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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