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Could spillovers from multinationals affect the trade activities of local firms?

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posted on 2023-06-07, 07:57 authored by Mattia Di UbaldoMattia Di Ubaldo, Iulia Siedschlag
This paper examines spillovers from foreign affiliates of multinationals on various margins of trade of local firms. We find that a larger foreign presence in the same region crowds out the trade activity of local firms, resulting in a reduction of the number of products imported and exported, as well as of the number of origins where imports are sourced from. Supply chain linkages with foreign affiliates are instead found to help local firms to diversify their exports and imports. Engagement in R&D activity allows local firms to mitigate some of the negative effects of the presence of foreign-owned firms in the same region, and enhances the local firms’ gains arising through forward linkages.

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Publication status

  • Published

File Version

  • Published version

Journal

Economics Letters

ISSN

0165-1765

Publisher

Elsevier

Volume

221

Page range

1-5

Department affiliated with

  • Economics Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2022-10-25

First Open Access (FOA) Date

2022-11-30

First Compliant Deposit (FCD) Date

2022-10-25

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