Export‐supporting FDI

Krautheim, Sebastian

doi:10.1111/caje.12061

Cited by 38 publications

(29 citation statements)

References 41 publications

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“…Also the massive outward FDI in the service sector is consistent with such a picture. As emphasized by Krautheim (), the trade service sectors, which typically support the exporting activities of German manufacturing companies, received a fairly large share of the total FDI (17 per cent in 2007), consistent with the scant investment and productivity growth recorded in the German domestic service sectors in the last decade (Coricelli and Wörgötter, ). Furthermore, the expansion of German banks and insurance companies abroad facilitated the foreign activities of the domestic manufacturing sector given their involvement in the management of medium‐size companies.…”

Section: Germany's Socio‐economic Model and Global Competitivenesssupporting

confidence: 52%

TheGerman Model and theEuropean Crisis

Bonatti

Fracasso

2013

J of Common Market Studies

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The large current account imbalances in the eurozone reflect persistent diverging trends between core and periphery countries, also fed by low interest rates and abundant capital flows brought about by the introduction of the euro. With the global financial crisis, the market sentiment has changed, and capital has left the periphery countries suffering from debt and growth problems due to their failure to bring price-wage dynamics into uniformity with those of the more disciplined countries. Germany is called upon to provide financial assistance and additional external demand; however, though the euro is at stake, Germans are recalcitrant. This article investigates the rationale of the German stance in light of the (corporatist-etatist, neo-mercantilist) German socio-economic model and the widespread concern about losing the competitiveness that Germany regained through painful reforms and changes in the last two decades.

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Section: Germany's Socio‐economic Model and Global Competitivenesssupporting

confidence: 52%

TheGerman Model and theEuropean Crisis

Bonatti

Fracasso

2013

J of Common Market Studies

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“…The importance of "export-supporting FDI", i.e. foreign investments in distribution to penetrate export markets, has been emphasized by Aeberhardt et al (2009);Arkolakis (2010) and Krautheim (2013). exports; if profitability exceeds the threshold µ EI = 2F I φ − φ 2 + τ , the exporting firm will find it profitable to invest in a distribution network, paying the fixed cost F I to reduce its variable costs. 49 As in our benchmark model, uncertainty can thus lead to a gradual internationalization process, whereby a firm's export entry precedes its FDI entry: during an initial trial period, the firm uses a local agent to distribute its exports in the foreign market; if it discovers that it can earn large enough profits in that market, it invests in distributionoriented FDI.…”

Section: A3: Distribution-oriented Fdimentioning

confidence: 99%

The internationalization process of firms: From exports to FDI

Conconi

Sapir

Zanardi

2016

Journal of International Economics

149

109

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This paper examines firms' choice between serving a foreign market through exports or foreign direct investment (FDI). We begin by unveiling a new empirical regularity: using a unique dataset that allows us to study the dynamics of firms' export and FDI choices in individual destination markets, we show that the overwhelming majority of firms serve a foreign market via exports before establishing affiliates in that market. To explain this pattern, we develop a simple dynamic model of export and FDI choices, in which a firm can only discover its ability to earn profits in a foreign market once it starts serving it. We show that uncertainty can lead to a gradual internationalization process, whereby the firm tests the foreign market via exports, before engaging in FDI. Consistent with the model's predictions, we find that most firms start serving a foreign market through exports; in the first years following export entry, many firms drop out of the foreign market, others survive and expand as exporters, some establish foreign affiliates. We show that a firm's export experience in a foreign market increases its probability of FDI entry; this effect decreases over time and increases with foreign market uncertainty. Our analysis suggests that exports and FDI, although substitutes from a static perspective, may be complements over time, since the knowledge acquired through export experimentation can lead firms to start investing abroad.JEL classifications: F10, D21, F13.

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“…This is distribution-oriented foreign direct investment (FDI), which plays an important role in fostering export services and commodity distribution. Its purpose is to promote sales in the foreign market, so we regard it as export-supporting OFDI (Krautheim 2013). As a result, we propose that China's OFDI has an export-supporting effect and that the relationship between exports and OFDI is complementary.…”

Section: Introductionmentioning

confidence: 98%

Outward Foreign Direct Investment and Export Performance in China

Wang

Liu

2017

Canadian Public Policy

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En tant que l'un des plus grands pays exportateurs du monde, la Chine a connu une importante croissance de ses investissements directs à l'étranger (IDE sortants). Dans cet article, les auteurs examinent les effets des facteurs liés à l'exportation sur les IDE sortants de la Chine grâce aux mesures de soutien à l'exportation et à la base d'exportation. À partir de données recueillies au moyen d'un panel couvrant la période 2003-2010 et concernant 144 pays, dont le Canada, les auteurs observent un effet important de la croissance des exportations sur les IDE sortants de la Chine. De plus, la base d'exportation occupe une place importante dans les IDE sortants de la Chine, une tendance qui s'est renforcée au cours des dernières années. Par ailleurs, les marchés des pays d'accueil voisins n'ont pas d'effets importants sur les IDE sortants. Les IDE sortants de la Chine ont un effet d'agglomération indéniable dans les pays d'accueil, et particulièrement dans les pays à revenu élevé. Ces résultats empiriques suggèrent que la Chine doit prêter attention aux doubles effets de son soutien à l'exportation et de sa base d'exportation sur ses IDE sortants. Le gouvernement devrait encourager les entreprises à mettre en place une stratégie portant à la fois sur le commerce et les investissements, et créer une plateforme de réseautage d'investissement pour protéger les investissements étrangers des entreprises.Mots clés : investissement direct à l'étranger, soutien des exportations, base d'exportation, effet spatial, Chine As one of the world's major exporters, China has witnessed a substantial increase in its outward foreign direct investment (OFDI). This article examines the effects of export-driven factors on China's OFDI through export-supporting and export platform. On the basis of 2003-2010 panel data from 144 countries and regions, including Canada, we find a strong effect of rising exports on China's OFDI. In addition, the export platform is an important part of China's OFDI, and this trend has strengthened in recent years. Moreover, markets of neighbouring host countries do not have a significant effect on the OFDI. China's OFDI has an obvious agglomeration effect in the host countries, particularly in high-income countries. The empirical results suggest that China should pay attention to the dual effects of its export-supporting and export platform on OFDI. The government should guide enterprises to implement a mixed international trade and investment strategy and build a platform of networking investment to protect firms' overseas investments.

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Export‐supporting FDI

Cited by 38 publications

References 41 publications

TheGerman Model and theEuropean Crisis

TheGerman Model and theEuropean Crisis

The internationalization process of firms: From exports to FDI

Outward Foreign Direct Investment and Export Performance in China

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