FDI Versus Exports in a General Equilibrium Ricardian Model

11 Pages Posted: 22 Aug 2011

See all articles by Jose De Jesus Noguera

Jose De Jesus Noguera

affiliation not provided to SSRN

Rowena Pecchenino

NUI Maynooth - Department of Economics

Date Written: September 2011

Abstract

In a two‐country general equilibrium Ricardian model, we propose a model in which countries compete in the same sectors via exports or foreign direct investment (FDI). Factor endowments are important in that they affect relative wages and the range of goods countries produce. Effects of factor endowments on FDI depend on the interaction of FDI and trade barriers. Transportation costs do favour FDI at the expense of exports, but reduce trade and investment. Finally, in contrast to the new trade theory, across industries, it is the relatively less productive firms that engage in FDI while the relatively more productive firms export.

Keywords: F11, F12

Suggested Citation

De Jesus Noguera, Jose and Pecchenino, Rowena, FDI Versus Exports in a General Equilibrium Ricardian Model (September 2011). Economic Record, Vol. 87, Issue 278, pp. 438-448, 2011, Available at SSRN: https://ssrn.com/abstract=1913096 or http://dx.doi.org/10.1111/j.1475-4932.2010.00693.x

Jose De Jesus Noguera

affiliation not provided to SSRN

No Address Available

Rowena Pecchenino (Contact Author)

NUI Maynooth - Department of Economics ( email )

County Kildare
Ireland
35317083751 (Phone)
35317083934 (Fax)

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