Export and direct investment as a signal in global markets

Arijit Mukherjee and Udo Broll ()

No 2001/09, Keele Department of Economics Discussion Papers (1995-2001) from Department of Economics, Keele University

Abstract: This paper examines the production strategies of an international firm. We show that foreign direct investment acts as a signal to overcome an asymmetric information problem in the host-country. We find that a host-country will prefer a situation where a technologically superior (inferior) firm does direct investment (export) compared to the situations where all or neither types of foreign firms are investing abroad. Since, the technologically superior (inferior) firm does direct investment (export) for moderate cost of direct investment, this finding suggests higher host-country welfare for moderate cost of direct investment compared to very small or very large costs of direct investment.

Keywords: Asymmetric information; Export; Foreign direct investment (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2001-11
References: Add references at CitEc
Citations:

Published in

Downloads: (external link)
http://www.keele.ac.uk/depts/ec/wpapers/0109.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.keele.ac.uk/depts/ec/wpapers/0109.pdf [301 Moved Permanently]--> https://www.keele.ac.uk:443/depts/ec/wpapers/0109.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kee:keeldp:2001/09

Ordering information: This working paper can be ordered from
Department of Economics, Keele University, Keele, Staffordshire ST5 5BG - United Kingdom
http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

Access Statistics for this paper

More papers in Keele Department of Economics Discussion Papers (1995-2001) from Department of Economics, Keele University Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Martin E. Diedrich ( this e-mail address is bad, please contact ).