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Exporting Behavior of Foreign Affiliates: Theory and Evidence

29 Pages Posted: 30 Oct 2009  

Jiangyong LU

Center for China in the World Economy

Yi Lu

School of Business, University of Hong Kong

Zhigang Tao

The University of Hong Kong - School of Business

Date Written: August 2009

Abstract

Firms have increasingly conducted different stages of production in different countries. In particular, they set up operations in low-cost countries (those operations are referred to as foreign affiliates in those countries) as platforms for export. What is the exporting behavior of foreign affiliates? In this paper, using data from China, we find that among foreign affiliates exporters are less productive than non-exporters (export discount). We then offer a theoretical explanation by incorporating the possibility that firms could have different stages of production in different countries into the standard firm heterogeneity model.

Keywords: Foreign Affiliates, Exporting Behavior, Export Discount, Firm Heterogeneity

JEL Classification: F12, F23, L22, D24, L6

Suggested Citation

LU, Jiangyong and Lu, Yi and Tao, Zhigang, Exporting Behavior of Foreign Affiliates: Theory and Evidence (August 2009). Available at SSRN: https://ssrn.com/abstract=1495664 or http://dx.doi.org/10.2139/ssrn.1495664

Jiangyong LU

Center for China in the World Economy ( email )

South 101, Shunde Building
School of Economics and Management, Tsinghua
Beijing 100084
China

HOME PAGE: http://www.ccwe.org.cn

Yi Lu (Contact Author)

School of Business, University of Hong Kong ( email )

Rm 730, Meng Wah Complex
Pokfulam Road
Hong Kong
Hong Kong
(852) 2241-5245 (Phone)
(852) 2858-5614 (Fax)

HOME PAGE: http://www.fbe.hku.hk/~luyi

Zhigang Tao

The University of Hong Kong - School of Business ( email )

Meng Wah Complex
Pokfulam Road
Hong Kong
China
(852) 2857-8223 (Phone)
(852) 2858-5614 (Fax)

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