Trade, Multinational Production, and the Gains from Openness

Natalia Ramondo, Andrés Rodríguez-Clare

NBER Working Paper No. 15604
Issued in December 2009
NBER Program(s):   EFG   IFM   ITI

This paper quantifies the gains from openness arising from trade and multinational production (MP). We present a model that captures key dimensions of the interaction between these two flows: Trade and MP are competing ways to serve a foreign market; MP relies on imports of intermediate goods from the home country; and foreign affiliates of multinationals can export part of their output. The calibrated model implies that the gains from trade can be twice as high as the gains calculated in trade-only models, while the gains from MP are slightly lower than the gains computed in MP-only models.

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This paper was revised on November 8, 2012

Acknowledgments

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