Asymmetric Effects of Trade and FDI: The Role of Country Size and Bridge Multinational Production

Lian Allub and Nicolas Aragon

No 1986, Research Department working papers from CAF Development Bank Of Latinamerica

Abstract: Total gains from openness come through three channels: (i) trade, (ii) domestic multinational production (DMP), and (iii) bridge multinational production (BMP). We develop a quantitative theory to measure the effects of trade barriers and country size on the gains from openness through each of these channels. We show that these are sensitive to country size and larger in Europe than in South America. Country size is a crucial determinant of the contribution of each of these channels to the total gains from openness. DMP is more important in large countries, whereas the BMP channel is more important in small countries.

Keywords: Comercio internacional; Finanzas (search for similar items in EconPapers)
Date: 2022
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Journal Article: Asymmetric effects of trade and FDI: The role of country size and bridge multinational production (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:dbl:dblwop:1986

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