NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Karolina Ekholm

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March 2003Export-Platform Foreign Direct Investment
with Rikard Forslid, James Markusen: w9517
Export-platform foreign direct investment in which the affiliate's output is (largely) sold in third markets rather than in the parent or host markets has received empirical attention recently, but little theoretical analysis. This paper is an attempt to make some sense of this phenomenon. We use a three-region model in which there are two identical, large, high-cost economies and a small low-cost economy. Pure export-platform production arises in a symmetric case, when a firm in each of the high-cost economies has a plant at home, and a plant in the low-cost country (the South) to serve the other high-cost country. This occurs when trade costs for intermediates (components) and plant-fixed costs are moderate and the South has a moderate cost advantage in assembly. Another interesting ...

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