Implications of Financial Development of the South for Trade and Foreign Direct Investment from the North

14 Pages Posted: 3 Apr 2014

See all articles by Larry D. Qiu

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Qing Liu

Renmin University of China

Date Written: May 2014

Abstract

Using a North–South model of heterogeneous firms, the paper investigates the effects of the financial development of the South on the choice of international entry mode (export vs foreign direct investment [FDI]) of Northern firms. Such development facilitates the entry of local firms and thus intensifies product market competition. As a result, the intensive margins, extensive margins and total sales from export or FDI of Northern firms are all reduced. The paper provides conditions that determine whether export or FDI is affected more significantly. The results generate empirically testable hypotheses.

Suggested Citation

Qiu, Larry Dongxiao and Liu, Qing, Implications of Financial Development of the South for Trade and Foreign Direct Investment from the North (May 2014). Special Issue: Issues in Asia. Guest Editor: Laixun Zhao, Vol. 18, Issue 2, pp. 272-285, 2014. Available at SSRN: https://ssrn.com/abstract=2419763 or http://dx.doi.org/10.1111/rode.12083

Larry Dongxiao Qiu (Contact Author)

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

Qing Liu

Renmin University of China ( email )

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
159
PlumX Metrics