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Conference Paper: Cross-country externalities of trade and FDI liberalization

TitleCross-country externalities of trade and FDI liberalization
Authors
KeywordsExport
FDI
Firm heterogeneity
Industry heterogeneity
Country heterogeneity
Ccross-country externalities
Wage inequality
Skill training
Contractual friction
Issue Date2010
Citation
The 2012 Hokkaido and Kyoto Universities Joint International Conference on International Economics and Economic Theory, Japan, 26-27 September 2012. How to Cite?
AbstractWe develop a three-country version of the Helpman, Melitz and Yeaple (2004) model with firm heterogeneity, industry heterogeneity and country heterogeneity to study firms’ foreign market entry strategies. We show that (i) for any single host country, the export-FDI cutoff is higher in more skill-intensive industries than in less skill-intensive industries; and (ii) for any single industry, the cutoff is lower (higher) in the more developed country than in the less developed country if the industry’s skill intensity is high (low). We also use this model to study how economic policy changes in one foreign country (F1) affect home firms’ market entry decisions in another foreign country (F2). We predicts that FDI liberalization in F1 results in the following: (i) some firms from the home country switch from export to FDI in F1; (ii) skilled labor’s wage rate drops in the home country; (iii) wage inequality between the skilled and unskilled labor decreases; and (iv) some firms from the home country switch from FDI to export to F2. The effects from trade liberalization are just the opposite, but the effects from education improvement are qualitatively the same as FDI liberalization. The cross-country externalities work through the domestic labor market, which is a new channel to understand cross-country effects of trade and FDI liberalization. The existence of cross-country externalities reduces the effects of foreign country’s liberalization on the home country’s labor market.
DescriptionSession 2: Jota Ishikawa (Hitotsubashi University)
Persistent Identifierhttp://hdl.handle.net/10722/188027

 

DC FieldValueLanguage
dc.contributor.authorLiu, Qen_US
dc.contributor.authorQiu, D-
dc.date.accessioned2013-08-21T07:25:49Z-
dc.date.available2013-08-21T07:25:49Z-
dc.date.issued2010-
dc.identifier.citationThe 2012 Hokkaido and Kyoto Universities Joint International Conference on International Economics and Economic Theory, Japan, 26-27 September 2012.en_US
dc.identifier.urihttp://hdl.handle.net/10722/188027-
dc.descriptionSession 2: Jota Ishikawa (Hitotsubashi University)-
dc.description.abstractWe develop a three-country version of the Helpman, Melitz and Yeaple (2004) model with firm heterogeneity, industry heterogeneity and country heterogeneity to study firms’ foreign market entry strategies. We show that (i) for any single host country, the export-FDI cutoff is higher in more skill-intensive industries than in less skill-intensive industries; and (ii) for any single industry, the cutoff is lower (higher) in the more developed country than in the less developed country if the industry’s skill intensity is high (low). We also use this model to study how economic policy changes in one foreign country (F1) affect home firms’ market entry decisions in another foreign country (F2). We predicts that FDI liberalization in F1 results in the following: (i) some firms from the home country switch from export to FDI in F1; (ii) skilled labor’s wage rate drops in the home country; (iii) wage inequality between the skilled and unskilled labor decreases; and (iv) some firms from the home country switch from FDI to export to F2. The effects from trade liberalization are just the opposite, but the effects from education improvement are qualitatively the same as FDI liberalization. The cross-country externalities work through the domestic labor market, which is a new channel to understand cross-country effects of trade and FDI liberalization. The existence of cross-country externalities reduces the effects of foreign country’s liberalization on the home country’s labor market.-
dc.languageengen_US
dc.relation.ispartofHokkaido & Kyoto Universities Joint International Conference on International Economics & Economic Theory 2012en_US
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectExport-
dc.subjectFDI-
dc.subjectFirm heterogeneity-
dc.subjectIndustry heterogeneity-
dc.subjectCountry heterogeneity-
dc.subjectCcross-country externalities-
dc.subjectWage inequality-
dc.subjectSkill training-
dc.subjectContractual friction-
dc.titleCross-country externalities of trade and FDI liberalizationen_US
dc.typeConference_Paperen_US
dc.identifier.emailQiu, D: larryqiu@hku.hken_US
dc.identifier.authorityQiu, D=rp01093en_US
dc.description.naturepostprint-
dc.identifier.hkuros216828en_US

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