Technological Asymmetries and Strategic Plant Location: The Case of Export-Platform Foreign Direct Investment
GEP Research Paper No. 2006/35
26 Pages Posted: 20 Nov 2006
Date Written: 2006
Abstract
We consider the plant location decision of a multinational corporation (MNC), which has the option to invest in a more or in a less technologically lagging country, and which aims to use its foreign plant as an export-platform. We show that the plant location decision of the MNC depends on whether the host country firms can export, and on whether they are able to compete in the product market. We also show that a conflict of interest does not necessarily arise between the plant location decision of the MNC and the preferences of the host countries' governments.
Keywords: Export-platform foreign direct investment, Plant location, Technological asymmetries
JEL Classification: D43, F12, F23, L11, L13
Suggested Citation: Suggested Citation