Firm Heterogeneity, Origin of Ownership and Export Participation

Matthew Cole, Robert Elliott () and Supreeya Virakul

Discussion Papers from Department of Economics, University of Birmingham

Abstract: This paper investigates the relationship between firm heterogeneity and a firm's decision to export, using the annual survey of Thai manufacturing firms from 2001 to 2004. A significant contribution of this paper is that we are, for the first time, able to break down FDI by country of origin to observe whether the behavior of MNEs differs by region of origin. We find that entry sunk costs and firm characteristics are important factors in explaining a firm's decision to export. Another important determinant is the ownership structure of the firm, with foreign owned firms having a higher probability of exporting than domestically owned firms although this differs across country of ownership with potentially important policy implications. Export platform FDI is used to explain the behavior of foreign firms that invest in Thailand. Using three measures of total factor productivity, we also find that highly productive firms self-select into the export market. The implication for governments of developing countries is the need to think carefully about how and to whom they target their inward FDI policies as a means of growth. The heterogeneous behavior of multinationals from different nations means that policies targeting specific regions or countries may be preferable to general tax concessions or the implementation of special economic zones that are open to all.

Keywords: FDI; exports; firm heterogeneity; development (search for similar items in EconPapers)
JEL-codes: D21 D24 F14 F23 O12 O14 O53 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009-11
New Economics Papers: this item is included in nep-int and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Firm Heterogeneity, Origin of Ownership and Export Participation (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bir:birmec:09-16

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