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The effect of exchange rates on firm exports and the role of FDI

Sir David Greenaway (), Richard Kneller () and Xufei Zhang ()

Review of World Economics (Weltwirtschaftliches Archiv), 2012, vol. 148, issue 3, 425-447

Abstract: This paper studies how exchange rate movements affect the export market entry and intensity decision of firms and the export behaviour of multinationals in the UK. Using data on British manufacturing firms we find that exchange rate movements have little effect on firm export participation but have a significant impact on export shares. Multinationals have at their disposal a greater array of instruments to deal with exchange rates changes, although their use may vary according to the motives behind FDI. We also find important differences according to the country of origin of multinational firms. Multinationals firms originating from outside of the EU are less affected by changes in the exchange rate compared to those inside, who appear similarly affected as domestic firms. Copyright Kiel Institute 2012

Keywords: Exchange rate movements; Export share; Multinational firms; F19; F23; F31 (search for similar items in EconPapers)
Date: 2012
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Review of World Economics (Weltwirtschaftliches Archiv) is currently edited by Paul Bergin, Holger Görg, Cédric Tille and Gerald Willmann

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