FDI, Exports & Aggregate Productivity
- Topics:
- Foreign Direct Investment,
- Organization
- Tags:
- Currency & Foreign Exchange,
- Finance,
- Foreign Direct Investment,
- Foreign Direct Investment (FDI),
- Investment,
- Productivity,
- Queen
- Source:
- Queen's University
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Overview: Empirical evidence confirms that trade exposure can shift resources towards the most efficient firms in an industry and induce substantial increases in aggregate productivity. Although studies document that much of world trade is controlled by multinational firms, few examine the effect of foreign direct investment decisions on resource allocation and aggregate productivity. This paper presents an open economy model where producers make simultaneous production and export decisions across different countries. In particular, the model highlights the interaction between firms' location and export decisions and their effect on aggregate productivity. The theoretical model is estimated using detailed plant-level Indonesian manufacturing data. The results are broadly consistent with the pattern of productivity, exports and foreign investment across firms.
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Format: PDF | Size: 328KB | Date: Mar 2007 | Pages: 48
