FDI versus Exports in a General Equilibrium Ricardian Model

Noguera, José de Jesus and Pecchenino, Rowena A. (2011) FDI versus Exports in a General Equilibrium Ricardian Model. Economic Record, 87 (278). pp. 438-448. ISSN 0013-0249

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In a two-country general equilibrium Ricardian model, we propose a model in which countries compete in the same sectors via exports or FDI. Factor endowments are important in that they affect relative wages and the range of goods countries produce. Effects of factor endowments on FDI depend on the interaction of FDI and trade barriers. Transportation costs do favor FDI at the expense of exports, but reduce trade and investment. Finally, in contrast to the new trade theory, across industries, it is the relatively less productive firms that engage in FDI while the relatively more productive firms export.

Item Type: Article
Additional Information: Preprint version of original published article. The definitive version is available at http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4932.2010.00693.x/full
Keywords: Foreign Direct Investment; General Equilibrium; Exports; International Trade;
Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
Item ID: 3001
Depositing User: Prof. Rowena Pecchenino
Date Deposited: 20 Jan 2012 09:37
Journal or Publication Title: Economic Record
Publisher: Wiley Blackwell
Refereed: No

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