Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58456 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 6054
Publisher: 
Institute for the Study of Labor (IZA), Bonn
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: 
Document Type: 
Working Paper

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