Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/sek/jijoes/v4y2015i3p94-114.html
   My bibliography  Save this article

The Role of FDI in Fostering Exports from the Host Country

Author

Listed:
  • Pavla Vozárová

    (University of Economics, Prague)

Abstract
In this paper, I propose a theoretical model analyzing the impact of FDI on exports from the host country. Using the framework of monopolistic competition with heterogenous firms, I show that the entry of highly efficient MNEs increases competition in the export market, which leads to crowding-out of domestic exporters. As a result, even though overall efficiency of the industry increases, exports by this industry may decrease.Further on, I add into my model a potential spillover effect that FDI can induce by lowering costs associated to export activities for all firms. I show that in such situation, the increased efficiency is more likely to outweigh the negative competition effect, resulting in larger exports from the host country.

Suggested Citation

  • Pavla Vozárová, 2015. "The Role of FDI in Fostering Exports from the Host Country," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 4(3), pages 94-114, September.
    • Handle: RePEc:sek:jijoes:v:4:y:2015:i:3:p:94-114
    as

    Download full text from publisher

    File URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-276
    Download Restriction: no
    File URL: https://iises.net/international-journal-of-economic-sciences/publication-detail-276?download=5
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cohen, Stephen D., 2007. "Multinational Corporations and Foreign Direct Investment: Avoiding Simplicity, Embracing Complexity," OUP Catalogue, Oxford University Press, number 9780195179361.
    2. Fernandes, Ana P. & Tang, Heiwai, 2014. "Learning to export from neighbors," Journal of International Economics, Elsevier, vol. 94(1), pages 67-84.
    3. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Renáta Kosová, 2010. "Do Foreign Firms Crowd Out Domestic Firms? Evidence from the Czech Republic," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 861-881, November.
    6. Koenig, Pamina & Mayneris, Florian & Poncet, Sandra, 2010. "Local export spillovers in France," European Economic Review, Elsevier, vol. 54(4), pages 622-641, May.
    7. Greenaway, David & Sousa, Nuno & Wakelin, Katharine, 2004. "Do domestic firms learn to export from multinationals?," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1027-1043, November.
    8. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lo Turco, Alessia & Maggioni, Daniela, 2018. "Effects of Islamic religiosity on bilateral trust in trade: The case of Turkish exports," Journal of Comparative Economics, Elsevier, vol. 46(4), pages 947-965.
    2. Jan Hanousek & Evzen Kocenda & Pavla Vozarova, 2017. "Productivity and Trade Spillovers: Horizontal Crowding-Out Versus Vertical Synergies in Europe as a Response to Foreign Direct Investment," CERGE-EI Working Papers wp601, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    3. Alessia LO TURCO & Daniela MAGGIONI, 2016. "For God's sake. The impact of religious proximity on firms' exports," Working Papers 418, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Pattnayak, Sanja Samirana & Chadha, Alka, 2022. "Servicification and manufacturing exports: Evidence from India," Economic Modelling, Elsevier, vol. 108(C).
    5. Jan Hanousek & Evzen Kocenda & Pavla Vozárová, 2020. "Impact of Multinational Enterprises on Competition, Productivity and Trade Spillovers across European Firms," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 70(2), pages 172-212, August.
    6. SHIMAMOTO Daichi & Yu Ri KIM & TODO Yasuyuki, 2019. "The Effect of Social Interactions on Exporting Activities: Evidence from Micro, Small, and Medium-Sized Enterprises in rural Vietnam," Discussion papers 19020, Research Institute of Economy, Trade and Industry (RIETI).
    7. Hynes, Kate & Kwan, Yum K. & Foley, Anthony, 2020. "Local linkages: The interdependence of foreign and domestic firms in Ireland," Economic Modelling, Elsevier, vol. 85(C), pages 139-153.
    8. Ferreira, Miguel & Adelino, Manuel & Fagandini, Paulo & Queiro, Francisco, 2020. "How Do Firms Respond to Demand Shocks? Evidence from the European Sovereign Debt Crisis," CEPR Discussion Papers 14640, C.E.P.R. Discussion Papers.
    9. Muhammed BENLI, 2016. "FDI and export spillovers using Heckman’s two step approach: Evidence from Turkish manufacturing data," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 315-342, Winter.
    10. L. An & C. Hu & Yong Tan, 2017. "Regional effects of export tax rebate on exporting firms: Evidence from China," Review of International Economics, Wiley Blackwell, vol. 25(4), pages 774-798, September.
    11. Jacopo Timini, 2018. "The drivers of Italian exports and product market entry: 1862-1913 (Updated August 2020)," Working Papers 1836, Banco de España, revised Aug 2020.
    12. Juyoung Cheong & Do Won Kwak & Kam Ki Tang, 2020. "Trade Elasticity: Estimates From Product-Level Data," Discussion Papers Series 616, School of Economics, University of Queensland, Australia.
    13. FERRAGINA, Anna Maria, 2013. "The Impact of FDI on Firm Survival and Employment: A Comparative Analysis for Turkey and Italy," CELPE Discussion Papers 127, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    14. MAYNERIS, Florian & PONCET, Sandra, 2011. "French firms at the conquest of Asian markets: the role of export spillovers," LIDAM Discussion Papers CORE 2011064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Jingfang Zhang & Emir Malikov, 2023. "Detecting Learning by Exporting and from Exporters," Journal of Productivity Analysis, Springer, vol. 60(1), pages 1-19, August.
    16. Neil Foster-McGregor, 2012. "Innovation and Technology Transfer across Countries," wiiw Research Reports 380, The Vienna Institute for International Economic Studies, wiiw.
    17. Eric E. O. Opoku & Isabel K. M. Yan & Kate Hynes, 2020. "Reaching up and reaching out: The impact of competition on firms’ productivity and export decisions," Pacific Economic Review, Wiley Blackwell, vol. 25(1), pages 69-101, February.
    18. Conti, Giuliano & Lo Turco, Alessia & Maggioni, Daniela, 2014. "Spillovers through backward linkages and the export performance of business services. Evidence from a sample of Italian firms," International Business Review, Elsevier, vol. 23(3), pages 552-565.
    19. Jamal Ibrahim Haidar, 2022. "Internalization of externalities in international trade," Empirical Economics, Springer, vol. 63(1), pages 469-497, July.
    20. Xuqian Hu & Canfei He, 2020. "Nontariff measures, trade deflection, and market expansion of exporters in China," Growth and Change, Wiley Blackwell, vol. 51(3), pages 932-953, September.

    More about this item

    Keywords

    FDI; MNE; spillovers; exports;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:jijoes:v:4:y:2015:i:3:p:94-114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://ijoes.iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.