Could spillovers from multinationals affect the trade activities of local firms?

Mattia Di Ubaldo and Iulia Siedschlag ()

Economics Letters, 2022, vol. 221, issue C

Abstract: This paper examines spillovers from foreign affiliates of multinationals on various margins of trade of local firms. We find that a larger foreign presence in the same region crowds out the trade activity of local firms, resulting in a reduction of the number of products imported and exported, as well as of the number of origins where imports are sourced from. Supply chain linkages with foreign affiliates are instead found to help local firms to diversify their exports and imports. Engagement in R&D activity allows local firms to mitigate some of the negative effects of the presence of foreign-owned firms in the same region, and enhances the local firms’ gains arising through forward linkages.

Keywords: Multinational firms; Multi-product firms; Knowledge spillovers; Trade margins (search for similar items in EconPapers)
JEL-codes: F12 F14 F23 F61 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:221:y:2022:i:c:s0165176522003731

DOI: 10.1016/j.econlet.2022.110899

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