In Search of Substitution Between Foreign Production and Exports

Bruce Blonigen

Chapter 9 in Foreign Direct Investment, 2019, pp 293-323 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Are foreign production and exports substitutes or complements? Standard theory of the multinational corporation (MNC) assumes substitution, while previous empirical work examining the relationship has generally found strong evidence of complementarity. This study examines product-level data, which more closely fits the assumption of a single-product firm often used in MNC theory, and finds substantial evidence for both a substitution and a complementarity effect between affiliate production and exports with Japanese automobile parts for the US market. I also test for and find evidence of substitution using product-level data on a set of Japanese-produced final consumer goods.

Keywords: Foreign Direct Investment; Multinational Enterprises; Mergers and Acquisitions; Greenfield; Trade Policy; Taxation; Spillovers; Offshoring; Wage Inequality; Firm-Specific Assets; Antidumping; Tariff-jumping; Industrial Organization; Ownership-Location-Internalization Theory (search for similar items in EconPapers)
JEL-codes: F02 F13 F6 (search for similar items in EconPapers)
Date: 2019
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Related works:
Journal Article: In search of substitution between foreign production and exports (2001)
Working Paper: In Search of Substitution Between Foreign Production and Exports (1999)
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