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Title:Speeding up the product cycle: The role of host country reforms PDF Logo
Authors:Sheng, Liugang
Yang, Dennis Tao
Issue Date:2011
Series/Report no.:Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6054
Abstract:We study the effects of policy reforms in the South on the decisions of intrafirm and arm's length production transfers by Northern firms. We show theoretically that relaxing ownership controls and improving contract enforcement can induce multinational companies to expand product varieties to host developing countries, and that a combination of the two reforms has an amplifying effect on product transfers. Consistent with these implications, we find that ownership liberalization and judicial quality played an important role in raising the extensive margin of processing exports in China for the period of 1997-2007. Our findings imply that institutional reforms in developing countries can effectively speed up the product cycle.
Subjects:product cycle
ownership structure
contract environment
export variety
processing trade
China
JEL:D23
F14
L24
Persistent Identifier of the first edition:urn:nbn:de:101:1-201111029404
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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