FDI Versus Exports: Multiple Host Countries and Empirical Evidence

15 Pages Posted: 8 Mar 2012

See all articles by Harald Oberhofer

Harald Oberhofer

Vienna University of Economics and Business - Department of Economics; Austrian Institute of Economic Research (WIFO)

Michael Pfaffermayr

University of Innsbruck - Department of Economics; Austrian Institute of Economic Research

Date Written: March 2012

Abstract

There are two main options for companies to serve foreign markets: exports and foreign direct investment (FDI). Based on the Helpman et al. (2004) model for multiple host countries, this paper derives a clear theoretical prediction for the decision between both strategies. A bivariate probit model is estimated using a large data set of European companies to analyse the probability of using one or the other strategy. The empirical evidence indicates that more productive firms less (more) probably use the export (FDI) strategy to serve foreign markets. Moreover, a considerable number of companies use a combination of both the strategies to serve foreign markets, which is in line with a multiple‚Äźcountry model.

Suggested Citation

Oberhofer, Harald and Pfaffermayr, Michael, FDI Versus Exports: Multiple Host Countries and Empirical Evidence (March 2012). The World Economy, Vol. 35, Issue 3, pp. 316-330, 2012, Available at SSRN: https://ssrn.com/abstract=2018158 or http://dx.doi.org/10.1111/j.1467-9701.2011.01403.x

Harald Oberhofer (Contact Author)

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
A-1020 Vienna
Austria

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Michael Pfaffermayr

University of Innsbruck - Department of Economics ( email )

Universitaetsstrasse 15
A-6020, Innsbruck
Austria
+43 512 507 7359 (Phone)

HOME PAGE: http://homepage.uibk.ac.at/~c43236/

Austrian Institute of Economic Research ( email )

P.O. Box 91
Wien, A-1103
Austria
+43 1 798 26 01-253 (Phone)
+43 1 798 93 86 (Fax)

HOME PAGE: http://www.wifo.ac.at/Michael.Pfaffermayr/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
472
PlumX Metrics