Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71920
Authors: 
Oberhofer, Harald
Pfaffermayr, Michael
Year of Publication: 
2007
Series/Report no.: 
Working Papers in Economics and Statistics 2007-28
Abstract: 
There are two main options for companies to serve foreign markets: exports and foreign direct investment (FDI). Based on the Helpman, Melitz and Yeaple (2004) model for two host countries this paper derives a clear theoretical prediction for the decision between both strategies. A bivariate probit model is estimated using AMADEUS database to analyse the probability of using one or the other strategy. The empirical evidence indicates that a considerable number of companies use a combination of both strategies to serve foreign markets, which is in line with the analyzed three country model.
Subjects: 
exports
foreing direct investment
three nations model
bivariate probit estimation
JEL: 
C35
D21
F12
Document Type: 
Working Paper

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