EconStor >
Deutsche Bundesbank, Forschungszentrum >
Discussion Paper Series 1: Economic Studies, Bundesbank >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/27746
  
Title:Export-Supporting FDI PDF Logo
Authors:Krautheim, Sebastian
Issue Date:2009
Series/Report no.:Discussion Paper Series 1: Economic Studies 2009,20
Abstract:Wholesale and retail trade affiliates owned by parent firms in manufacturing account for a considerable fraction of overall affiliate sales. Although quantitatively important, this Export-Supporting FDI (ESFDI) activity has received little attention in the literature. This paper includes ESFDI into a model of trade and horizontal FDI with heterogeneous firms. ESFDI is characterized by export-supporting distribution and service activities in the foreign market while production remains in the home country. This introduces some complementarity between trade and FDI. In the model falling trade costs lead to an increase in both overall trade and overall FDI activity. This provides a possible explanation for the simultaneous rise in trade and FDI in the data. An empirical analysis using German firm level FDI data confirms the quantitative importance of ESFDI. The data also support crucial implications of the theoretical model. Parents choosing ESFDI are smaller than firms choosing to produce in the foreign market. And the importance of ESFDI relative to horizontal FDI is strongest when variable trade costs are low.
Subjects:Exports
horizontal FDI
multinational companies
wholesale trade
JEL:F12
F23
ISBN:978-3-86558-542-4
Appears in Collections:Discussion Paper Series 1: Economic Studies, Bundesbank

Files in This Item:
File Description SizeFormat
607703962.PDF1.08 MBAdobe PDF
No. of Downloads:
last Month last 3 Month total
Show full item record
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/27746

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.