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Multinational Production, Exports and Aggregate Productivity

Joel Rodrigue ()

Review of Economic Dynamics, 2014, vol. 17, issue 2, 243-261

Abstract: This paper presents and estimates a dynamic model of multinational production (MP) and exports with heterogeneous firms. The model highlights the interaction between firms' location and export decisions and their effect on aggregate productivity. The model is structurally estimated using firm-level Indonesian manufacturing data. The results are broadly consistent with the pattern of productivity, exports and MP across firms. Counterfactual experiments suggest that there are substantial productivity gains due to international trade and MP. The implied changes in steady state real wages, however, are relatively small. The experiments emphasize that the nature of firm-level trade and MP interactions are crucial to determining the aggregate effects of trade and foreign direct investment policy. (Copyright: Elsevier)

Keywords: Exports; Multinational production; Foreign direct investment; Firm heterogeneity; Aggregate productivity; Resource allocation; Indonesia (search for similar items in EconPapers)
JEL-codes: C23 F12 F23 O47 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.red.2013.08.002

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