3D printing, international trade, and FDI

Ana Lucia Abeliansky, Inmaculada Martínez-Zarzoso and Klaus Prettner

Economic Modelling, 2020, vol. 85, issue C, 288-306

Abstract: We analyze the relationship between 3D printing technology, the volume of trade, and the structure of foreign direct investment (FDI). We present a standard trade model with firm-specific heterogeneity into which we include 3D printing as a technology choice for foreign direct investment. The model generates three predictions. First, 3D printers are introduced in areas with high economic activity that face high transport costs. Second, technological progress in 3D printing leads to FDI dependent on traditional techniques gradually being replaced by FDI based on 3D printing. Third, with wider adoption, further technological progress in 3D printing leads to a gradual replacement of international trade. Empirical evidence focusing on the sectors with the highest rates of adoption supports the first hypothesis, while evidence from a case study supports the second and third. Our results suggest that the traditional strategy of poor countries for export-led industrialization is threatened by the widespread adoption of 3D printing that replaces international trade.

Keywords: 3D printing; Technological change; Innovation; FDI; Trade; Development challenges (search for similar items in EconPapers)
JEL-codes: F10 F23 O19 O33 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:85:y:2020:i:c:p:288-306

DOI: 10.1016/j.econmod.2019.10.014

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