NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Regional Trade Integration and Multinational Firm Strategies

Pol Antràs, C. Fritz Foley

NBER Working Paper No. 14891
Issued in April 2009
NBER Program(s):   ITI

This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.

download in pdf format
   (223 K)

email paper

This paper is available as PDF (223 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14891

Published: Antràs, Pol, and Fritz C Foley. 2011. Regional Trade Integration and Multinational Firm Strategies. In Costs and Benefits of Economic Integration in Asia, Robert J Barro and Lee, Jong-Wha, Ch. 8. Oxford, New York: Oxford University Press. DOI:10.1093/acprof:oso/9780199753987.001.0001

Users who downloaded this paper also downloaded these:
Blomstrom and Kokko w6019 Regional Integration and Foreign Direct Investment
Antràs and Staiger w14285 Offshoring and the Role of Trade Agreements
Antràs and Costinot w15750 Intermediated Trade
Antràs and Costinot w15751 Intermediation and Economic Integration
Benigno w14824 New-Keynesian Economics: An AS-AD View
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us