Demonstration or Congestion? Export Spillovers in Sweden
University of Nottingham Research Paper No. 2005/44
59 Pages Posted: 16 Dec 2005
Date Written: 2005
A key feature of the Swedish economy over the last decade and a half has been the rapid internationalisation of its economy, both through FDI and trade. In this paper we consider the relationship between these two trends: whether the effect of increased inward FDI on exports by domestic firms may be positive or negative. The first case may occur as a result of demonstration effects. The second may reveal congestion effects. We also consider whether FDI affect the sunk costs or variable costs of exporting. Our results indicate that congestion effects dominate since increased inward FDI has led to a significant reduction in the probability of export market participation.
Keywords: FDI, export spillovers, export platforms
JEL Classification: F13, F23
Suggested Citation: Suggested Citation