Export-Platform FDI: Cannibalization or Complementarity?

Pol Antras, Evgenii Fadeev, Teresa Fort and Felix Tintelnot

No 32081, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a model of export-platform foreign direct investment (FDI) in which final goods are produced only with labor and there are no fixed costs of exporting. We derive a simple condition that determines whether an MNE's plants are substitutes or complements. This condition is shaped by the relative size of (i) the cross-firm elasticity of demand the MNE faces for its goods and (ii) the within-firm elasticity of labor substitution across the MNE's plants. In two extensions of the model, we show that this complementarity is enhanced by firm-level (rather than plant-level) fixed costs of exporting and of sourcing inputs.

JEL-codes: F1 F2 F4 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-int and nep-inv
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Published as Pol Antràs & Evgenii Fadeev & Teresa C. Fort & Felix Tintelnot, 2024. "Export-Platform FDI: Cannibalization or Complementarity?," AEA Papers and Proceedings, vol 114, pages 130-135.

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