Autori
Basevi, Giorgio
Ottaviano, Gianmarco I. P.

Titolo
The district goes global: Export vs FDI
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1999 - Fascicolo: 29 - Pagina iniziale: 1 - Pagina finale: 22

This paper depicts an industriai district as a center of innova-tion and production in a sector characterized by horizontal prod-uct differentiation. Locai technological externalities sustain thè endogenous invention of new varieties by profit-seeking firms. Af-ter invention, because a substantial fraction of their output is demanded by distant markets, firms face a cruciai choice between reaching them by exports or by FDIs. The paper studies thè ef-fects that 'globalization' - in thè form of lower trade costs and freer capitai flows - has on this choice. In particular, it analizes thè efficiency of firms decisions from thè point of view of thè district as a whole. It shows that in thè decentralized outcome firms engagé in too much FDI and too little exportation when there are stili substantial barriers to trade and foreign investment, while thè reverse is true when such barriers are lowered.



Testo completo: http://www.iue.it/ECO/WP-Texts/ECO99-29.pdf

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