Trade, FDI, and the Organization of Firms

By E. Helpman. 2006

1,179 citations recorded by the source corpus.

New developments in the world economy have triggered research designed to better understand the changes in trade and investment patterns, and the reorganization of production across national borders. Although traditional trade theory has much to offer in explaining parts of this puzzle, other parts required new approaches. Particularly acute has been the need to model alternative forms of involvement of business firms in foreign activities, because organizational change has been central in the transformation of the world economy. This paper reviews the literature that has emerged from these efforts. The theoretical refinements have focused on the individual firm, studying its choices in response to its own characteristics, the nature of the industry in which it operates, and the opportunities afforded by foreign trade and investment. Important among these choices are organizational features, such as sourcing strategies. But the theory has gone beyond the individual firm, studying the implications of firm behavior for the structure of industries. It provides new explanations for trade structure and patterns of FDI, both within and across industries, and has identified new sources of comparative advantage.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/84acdacb6e0f40981c1980270a21a6d3e2adc9d8

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Citations in the corpus

Spiders and snakes: Offshoring and agglomeration in the global economy (2013, positive): “Others have linked it to multinational activity (Helpman 1984, Fujita and Thisse 2006) and have placed it in the wider context of the organisation of firms (Helpman 2006).”
Domestic Institutions as a Source of Comparative Advantage (2013, neutral): “The fixed costs 23For earlier reviews of this literature see Spencer (2005), Helpman (2006) and Nunn and Trefler (2008).”
Understanding Cross-Country Differences in Exporter Premia: Comparable Evidence for 14 Countries (2008, background): “Gravity models of international trade as well as recent theories of heterogeneous firms and trade (see Helpman (2006) and Greenaway and Kneller (2007) for review articles) guide to select a set of theoretically motivated variables that may be correlated with exporter premia across countries to…”
Facilitating international production networks: The role of trade logistics (2012, neutral): “As many authors note, vertical specialization has been at the center of the international organization of production in recent decades (Helpman 2006).”
Improved Access to Foreign Markets Raises Plant-level Productivity…For Some Plants (2010, neutral): “Consider the standard Melitz (2003) problem as described in Helpman (2006).”
Global Sourcing of Complex Production Processes (2014, positive): “As in Antràs and Helpman (2004), higher component-intensity tends to favor outsourcing.”
Accounting for intermediates: Production sharing and trade in value added (2012, background): “8See Helpman (2006) or Antràs and Rossi-Hansberg (2008) for a review of some of this literature.”
Offshoring and Unemployment: The Role of Search Frictions and Labor Mobility (2009, background): “as follows. Equation ( 16 ) represents the wage curve, WC which is clearly upward sloping in the (w;�) space in”
Heterogeneous responses of firms to trade protection (2008, background): “In addition to a fixed cost of exporting (Melitz, 2003; Helpman, 2006 ), the model assumes a fixed cost of productivity-improving investment.”
Towards a Theory of Trade Finance (2011, neutral): “For a survey see Helpman (2006).”