EconStor >
ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >

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

http://hdl.handle.net/10419/30691
  
Title:Uncertain productivity growth and the choice between FDI and export PDF Logo
Authors:Yalcin, Erdal
Issue Date:2009
Series/Report no.:CESifo working paper 2773
Abstract:The underlying model analyzes the first time foreign market entry decision of a representative investor who can choose between export and FDI. The model combines the proximity-concentration trade-off framework with the real option methodology and sheds light on the effects of productivity growth. On the basis of a Geometric Brownian motion, three different productivity scenarios are considered (no growth, deterministic growth, uncertain growth) and opposed to each other. The introduction of productivity growth increases the likeliness of first time market entry through FDI. If the firm is confronted with uncertain productivity growth, market entry through FDI increases even further. Uncertainty is identified as a compounding force for the derived growth effects. The findings contribute to the static general equilibrium models which neglect intertemporal selection effects.
Subjects:export
FDI
uncertain productivity growth
real option approach
JEL:F17
F21
F23
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

Files in This Item:
File Description SizeFormat
610041592.pdf472.11 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/30691

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