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Trade Orientation and Productivity Gains from International Production: A Study of Overseas Operations of US Multinationals

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  • Prema-chandra Athukorala
  • Satish Chand

Abstract

The effect of the trade policy regime of the host country on its productivity gains from international production is an issue of obvious policy relevance and analytical interest but one on which there has been a dearth of empirical research. This paper aims to fill this gap through an analysis of a cross-section of data on overseas production of US manufacturing multinationals in 44 countries over the period 1983-1992. The findings provide strong support for the proposition that, other things being equal, productivity gains from international production tend to be greater under a more open trade policy regime compared to a restrictive regime. There is also evidence of a significant negative effect of a stringent domestic tax regime on efficiency gains from international production.

Suggested Citation

  • Prema-chandra Athukorala & Satish Chand, 1998. "Trade Orientation and Productivity Gains from International Production: A Study of Overseas Operations of US Multinationals," Departmental Working Papers 1998-02, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:1998-02
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    Cited by:

    1. Zeshan Atique & Mohsin Hasnain Ahmad & Usman Azhar, 2004. "The Impact of FDI on Economic Growth under Foreign Trade Regimes: A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(4), pages 707-718.
    2. M. Olufemi Saibu, 2012. "An analysis of causal nexus between foreign direct investment, exchange rate and financial market development in Nigeria (1970 to 2009)," African Journal of Economic and Sustainable Development, Inderscience Enterprises Ltd, vol. 1(1), pages 95-102.
    3. Archanun Kohpaiboon, 2003. "Foreign trade regimes and the FDI-Growth Nexus: a case study of Thailand," Journal of Development Studies, Taylor & Francis Journals, vol. 40(2), pages 55-69.
    4. Satish Chand, 2002. "International tax arbitrage via corporate income splitting," Quantitative Finance, Taylor & Francis Journals, vol. 2(2), pages 111-115.
    5. Klaus E Meyer & Evis Sinani, 2009. "When and where does foreign direct investment generate positive spillovers? A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(7), pages 1075-1094, September.
    6. Gomes Nogueira, Caroline & Padilla, Ramón, 2015. "Determinants and home-country effects of FDI outflows: Evidence from Latin American countries," Estudios y Perspectivas – Sede Subregional de la CEPAL en México 38914, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    7. Mei Wen, 2005. "Foreign Direct Investment, Regional Geographical and Market Conditions, and Regional Development: A Panel Study on China," Departmental Working Papers 2005-12, The Australian National University, Arndt-Corden Department of Economics.
    8. Thuyen, Truong Thi Ngoc & Jongwanich, Juthathip & Ramstetter, Eric D., 2017. "Trade protection and productivity differentials between multinationals and local firms in Vietnamese manufacturing," AGI Working Paper Series 2017-01, Asian Growth Research Institute.

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