EXPORT-PLATFORM FOREIGN DIRECT INVESTMENT

By Karolina Ekholm, R. Forslid, James R. Markusen. World Scientific Studies in International Economics, 2003

748 citations recorded by the source corpus.

Export-platform foreign direct investment in which the affiliate’s output is (largely) sold in third markets rather than in the parent or host markets has received empirical attention recently, but little theoretical analysis. This Paper is an attempt to make some sense of this phenomenon. We use a three-region model in which there are two identical, large, high-cost economies and a small low-cost economy. Pure export-platform production arises in a symmetric case, when a firm in each of the high-cost economies has a plant at home, and a plant in the low-cost country (the South) to serve the other high-cost country. This occurs when trade costs for intermediates (components) and plant-fixed costs are moderate and the South has a moderate cost advantage in assembly. Another interesting and empirically important case arises when there is trade liberalization between one of the high-cost countries and the small, low-cost country. The outside high-cost country may wish to build a branch plant inside the free trade area due to market size, but chooses the low-cost country on the basis of cost. Or a firm headquartered in the large country inside the free-trade area might build a single plant in its low-wage partner in order to serve their joint free-trade area and to export to the outside high-cost country.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/7aeed21b3d54a41f1fe41edb8abe9cfdeb966dff

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Citations in the corpus

Do Natural Resources Attract Nonresource FDI? (2013, neutral): “Export platform FDI has the proximity benefits of horizontal FDI without the costs of setting up affiliates in surrounding countries (Ekholm et al., 2007; Baltagi, Egger, & Pfaffermayr, 2007).”
Location Decision of Heterogeneous Multinational Firms (2009, neutral): “For theoretical contributions in this area, see, for example, Motta and Norman (1996), Head and Ries (2003), and Ekholm et al. (2007).”
An empirical investigation of the pollution haven effect with strategic environment and trade policy (2009, neutral): “In fact, a number of prior work including Carr et al. (2001), Markusen and Maskus (2002), Blonigen et al. (2003), Yeaple (2003a), and Ekholm et al. (2007) have used GCR survey variables to estimate various influences on multinational activity, although none have previously examined the…”
The economic impact of Special Economic Zones: Evidence from Chinese municipalities (2013, neutral): “…n years have passed since the year of having the Special Economic Zone experiment, where -2 n 2, and another dummy variable equal to 1 if three years or more have passed Yipt = + 2X n= 2 n D(T + n)ipt + 3 D(T + 3)ipt + i + i (t 1977) + t + "ipt 27Refer to Whalley&Xin(2006) and Ekholm et al.(2007).”
It matters where you go: Outward foreign direct investment and multinational employment growth at home (2010, neutral): “Empirical work by Hanson et al. (2001) and theoretical work by Yeaple (2003) and Ekholm et al. (2007) have emphasized that the complexity of MNC integration strategies.”
Asymmetric Effects of Corruption on FDI: Evidence from Swedish Multinational Firms (2008, neutral): “8 See, for example, Ekholm et al. (2007) and Yeaple (2003).”
Vertical Production Networks in Multinational Firms (2003, neutral): “Along these lines, Ekholm, Forslid, and Markusen (2003) model “export platform” FDI, in which most affiliate output is exported out of the host country.”