Foreign direct investment,international trade,and firm heterogeneity |
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Authors: | Hiroyuki Nishiyama Masao Yamaguchi |
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Affiliation: | 1. School of Economics, University of Hyogo, 8-2-1, Nishi-Ku, Kobe, 651-2197, Japan;2. Faculty of Economics, Osaka University of Economics, Japan |
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Abstract: | We present an asymmetric model with firm heterogeneity and foreign direct investment (FDI) from a developed country to a developing country. We found that the successful entry firms could be sorted from highest to lowest according to productivity as reimport firms, FDI firms, export firms, and domestic firms. We also found that FDI decreases (increases) the gross national income of the developed (developing) country, but it can either increase or decrease the world income according to the level of the relative propensity to spend. In addition, we demonstrated that FDI influences welfare through variations in average price, national income, and the number of types of goods. |
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Keywords: | North&ndash South model Firm heterogeneity Foreign direct investment Reimport World welfare |
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