Working Paper: NBER ID: w2390
Authors: Magnus Blomström; Robert E. Lipsey; Ksenia Kulchycky
Abstract: Overseas production in a country by affiliates of Swedish and U.S. firms rarely appears to displace exports from the two home countries and in most cases either has no effect or tends to increase home country exports. The positive effect on Swedish exports is evident not only with respect to levels of exports to different countries at one time but also with respect to changes in exports over time. The positive effect on U.S. exports can be observed for minority-owned as well as majority-owned foreign operations.
Keywords: Direct Investment; Exports; International Trade
JEL Codes: F21; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| local production enhances demand for the firm's products (R32) | increase in home country exports (F10) |
| local production increases market share (F61) | increase in home country exports (F10) |
| foreign production may substitute for exports (F10) | decrease in home country exports (F69) |
| foreign production by affiliates of Swedish and US firms (F23) | home country exports (F10) |
| increase in Swedish affiliate production in a host country (F29) | increase in Swedish exports to that country (F10) |