ECON 8413-001 International Trade Theory

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ECON 8413-001 International Trade Theory
Graduate International Trade Course – 8413
Thibault Fally, University of Colorado-Boulder
Fall 2012
Course outline
Economics 8413 is a course on International Trade designed for Ph.D. students in the Economics
Department. It will cover theoretical as well as empirical issues, with an emphasis on core models (part
one) and firms (part two). The prerequisites are first-year graduate courses in microeconomics,
macroeconomics and econometrics. Students from other departments are welcome subject to instructor’s
approval. You will find below a tentative schedule (note: 1 lecture = 1h15). This schedule remains
flexible depending on the speed of advancement and students’ interests:
First part: General theories (about 10 lectures)
1 lecture: introduction, motivation, data availability
3 lectures on Heckscher Ohlin (review, empirical tests)
3 lectures on recent Ricardian models (Eaton Kortum 2002 and related developments)
3 lectures on gravity equations, home market effect and gains from trade
Second part: Firms in Trade (about 6 lectures)
3 lectures on firm heterogeneity and international trade (theory): preliminary evidence on firm
heterogeneity (motivation), Melitz 2003 model, endogenous markup models.
3 lectures on the empirics of firm heterogeneity (firm-level evidence).
Note: topics related to multinational firms will be covered in the Spring Trade course.
Third part: Other topics
1 lecture on Trade in intermediate goods
1 lecture on quality, Linder hypothesis.
2 lectures on Trade and Institutions, Trade and financial constraints
2 lectures on Trade Policy (tariffs, FTA), political economy of trade policy
Other topics could be discussed, time permitting:
Trade and growth, Technology transfers, Trade and wage inequalities, Networks, Trade and
environmental issues, Culture and trade, Quality and product standards, Multi-product firms.
Contact information
Email: [email protected]
Office: 11
Office hours: Monday and Wednesday, 2.00 – 3.00 pm and by appointment.
Please come to visit my office at least once before the midterm. I would like to hear your suggestions and
check how you feel about the course. This is important for me and for you.
Course requirements and grading
After each lecture, I will tell you which article(s) or book chapter(s) to read before the following lecture.
As part of the grade (20%), I will ask you to write comments almost every week on one article. There will
be about a dozen comments due in total, and I will decide your grade based on your 10 best comments.
These articles will be posted on the course website. I would like to receive these comments no later than
Sunday by 4pm if the comment is due on Monday. Please include “8413” in the title of your email.
These comments should take about 15 lines, and should include: 1) a brief summary using your own
words, 2) the most important contribution(s) of the paper, 3) its main limitations (if you see any), whether
you are convinced by the results and whether you would have done things differently, 4) and your
questions (if any). The comments should be precise and clear (clarity is an important part of the grade on
these comments). Do not copy parts of the abstract or conclusion, but find your own way to write these
comments. If you feel that you have not understood an important point of the paper, please say it in the
comments. That way, I can put an emphasis on those points during the lectures. I will try to answer your
questions during the following lecture (keeping your questions anonymous).
I will also ask you to comment one article more in details (15% of the grade). These comments may take
the form of a referee report (approx. 5 pages) or a class presentation.
Please choose an article (preferably an article that has not been covered in class in details) and send me an
email with you preferences before I give my approval. I may ask you to choose another article. If you
want to make a presentation instead of a referee report, you should ask me soon enough such that I can
coordinate with the course content (e.g. before the midterm). Referee reports are due one week after
Class participation counts for another 20% of the grade. This includes the presentation of one paper
(distinct from the one with the referee report) in class towards the end of the semester (35 min
presentation). You will need to contact me for the choice of the paper to present in order to coordinate and
cover distinct subjects. This part of the grade also refers to participation during regular lectures. Please be
on time and feel free to ask questions during the course: I welcome comments and debates during the
lectures. Also, attendance at the Department seminar is required when a trade paper is presented.
There will be two written exams: a midterm (15%) and a final (35%). The midterm will be on October
31st and the final will be on December 18th at 7.30pm (time imposed by the registrar’s office). Please let
me know as soon as possible if there is any incompatibility.
Reading list
Double asterisks (**) refer to key readings (mandatory). Asterisks (*) signal strongly recommended
readings. The reading list may be updated throughout the semester (and posted on the course website).
Main book:
• Feenstra, R.C., Advanced International Trade: Theory and Evidence (Princeton, Princeton
University Press), 2003.
Other recommended books:
• Helpman, E. and P. Krugman, Market Structure and Foreign Trade, (Cambridge, MA, and
London, The MIT Press), 1985.
• Grossman, G.M. and E. Helpman, Innovation and Growth in the Global Economy, (Cambridge,
Ma, and London, The MIT Press), 1991.
• Markusen J.R., J.R. Melvin, W.H. Kaempfer, K.E.Maskus, “International Trade: Theory and
Evidence”, McGraw-Hill, 1995
• “The Great Trade Collapse: Causes, Consequences, and Prospects”, ed. by R. Baldwin,
VoxEU.org, 2009
First part: General theories
Factor content of trade
• ** Feenstra, 2003, chapter 2, 3 and 4
• ** Davis, D.R. and D.W. Weinstein, “An Account of Global Factor Trade,” American Economic
Review, December 2001, 91(5), 1423-53.
• ** Trefler, D., “The Case of the Missing Trade and Other Mysteries,” American Economic
Review, December 1995, 85(5), 1029-46.
• * Helpman, E. “The Structure of Foreign Trade,” Journal of Economic Perspectives, Spring 1999,
13(2), 121-44.
• * Trefler, Daniel & Zhu, Susan Chun, 2010, “The structure of factor content predictions”, Journal
of International Economics, vol. 82(2), p 195-207.
• * Romalis, J., “Factor Proportions and the Structure of Commodity Trade,” American Economic
Review, March 2004, 94(1), 67-97.
• Deardorff, A., “The General Validity of the Heckscher-Ohlin Theorem”, American Economic
Review, 72(4), September, 1982, 683-94.
• Dornbusch, R., S. Fischer and P.A. Samuelson, “Heckscher-Ohlin Theory with a Continuum of
Goods”, Quarterly Journal of Economics Papers, 1980.
• Schott, Peter K., “One Size Fits All? Heckscher-Ohlin Specialization in Global Production,”
American Economic Review, 2003, Vol. 93, 686-708.
• Trefler, D., “International Factor Price Differences: Leontief was Right!”, Journal of Political
Economy, December, 1993, 101(6), 961-87.
Ricardian theory and tests
• ** Feenstra, 2003, chapter 1
• ** Eaton, J. and S. Kortum, 2002, “Technology, Geography, and Trade,” Econometrica, 70 (5),
2002, 1741-1779.
• * Costinot, Arnaud, Dave Donaldson and Ivana Komunjer, "What Goods Do Countries Trade: A
Quantitative Exploration of Ricardo's Ideas", Review of Economic Studies, 2012, vol. 79, issue 2,
pp. 581-608
• * Donaldson, Dave, “Railroads of the Raj: Estimating the Economic Impact of Transportation
Infrastructure”, LSE mimeo
• Bernhofen, D.M. and J.C. Brown, “A Direct Test of the Theory of Comparative Advantage: The
Case of Japan,” Journal of Political Economy 112(1), 2004, 48-67.
• Dornbusch, R., S. Fischer and P.A. Samuelson, “Comparative Advantage, Trade and Payments in
a Ricardian Model with a Continuum of Goods,” American Economic Review, 1977, 823-39.
• Eaton, Jonathan and Samuel Kortum, "Putting Ricardo to Work", forthcoming, Journal of
Economic Perspectives.
• Eaton, Jonathan, Samuel Kortum and Sebastian Sotelo, "International Trade: Linking Micro and
Macro", NBER Working Paper #17864, 2012.
• Hanson, G. 2012. The Rise of Middle Kingdoms: Emerging Economies in Global Trade. Journal
of Economic Perspectives, forthcoming.
Product varieties, gravity equation, gains from trade
• ** Feenstra, 2003, chapter 5
• ** Arkolakis, C., A. Costinot and A. Rodriguez-Clare, “New Trade Models, Same Old Gains?”
American Economic Review, 2012, 102(1), 94-130.
• * Anderson, J. and van Wincoop, E. (2004) "Trade Costs", Journal of Economic Literature, 42,
• * Anderson, J. and E. van Wincoop, “Gravity with Gravitas: A Solution to the Border Puzzle,”
American Economic Review, 2003, 170-192.
• * Broda, Christian and David Weinstein (2006). “Globalization and the Gains from Variety,”
Quarterly Journal of Economics 121(2).
• * Krugman, P., "Increasing Returns, Monopolistic Competition, and International Trade", Journal
of International Economics 1979.
• * Santos Silva, J. and Tenreyro, S. ``The Log of Gravity", Review of Economics and Statistics,
Vol. 88, No. 4, Pages 641-658.
• Antweiler, W. and D. Trefler, “Increasing Returns and All That: A View from Trade,” American
Economic Review, March 2002, 92(1), 93-119.
• Fally, T. “Structural Gravity and Fixed Effects”, mimeo Colorado
• Head, K. and T.Mayer (2004). ”The Empirics of Agglomeration and Trade”. In V.Henderson and
J.F.Thisse (Eds.), Handbook of Regional and Urban Economics, Vol 4: 2609-2669. North
• Helpman, E. and P. Krugman, Market Structure and Foreign Trade, (Cambridge, MA, and
London, The MIT Press), 1985. Monopolistic competition: chapters 6 to 11.
• Hummels, David and Peter Klenow (2005). “The Variety and Quality of a Nation’s Exports,”
American Economic Review 95, p.704-723.
• Krugman, P.R., “Scale Economies, Product Differentiation and the Pattern of Trade”, American
Economic Review, 1980.
• Krugman, P., “Increasing Returns and Economic Geography”, Journal of Political Economy
Second part: Firms in trade
Firm heterogeneity: theory
• ** Melitz, Marc (2003). "The Impact of Trade on Intra-Industry Reallocations and Aggregate
Industry Productivity," Econometrica, 71(6), p.1695-1725.
• ** Melitz, Marc and Gianmarco Ottaviano (2008). "Market Size, Trade and Productivity,"
Review of Economic Studies, vol. 75(1), pages 295-316, 01.
• * Arkolakis, C., A. Costinot, D. Donaldson and A. Rodriguez-Clare, “The elusive procompetitive effects of trade”, mimeo, check for updates of the paper.
• * Chaney, Thomas (2008). "Distorted Gravity: The Intensive and Extensive Margins of
International Trade," American Economic Review, September 2008, Vol. 98, No. 4.
• * Helpman, E., “Trade, FDI, and the Organization of Firms,” Journal of Economic Literature,
XLIV, 2006, 589-630
• Yeaple, S., “A Simple Model of Firm Heterogeneity, International Trade, and Wages”, Journal of
International Economics 2005.
• Arkolakis, Costas, "Market Access Costs and the New Consumers Margin in International
Trade," Journal of Political Economy, 2010, 118 (6), 1151-1199.
• Bernard, Andrew, Jonathan Eaton, Bradford Jensen and Samuel Kortum (2003), "Plants and
Productivity in International Trade," American Economic Review, 93(4), p.1268-1290.
Empirics on firm heterogeneity
• ** Eaton, Jonathan, Samuel Kortum and Francis Kramarz (2004b). "Dissecting Trade: Firms,
Industries, and Export Destinations," American Economic Review P&P, 94, p.150-154.
• ** Helpman, Elhanan, Marc Melitz and Yona Rubinstein (2008). "Estimating Trade Flows:
Trading Partners and Trading Volumes," Quarterly Journal of Economics, forthcoming.
• ** Pavcnik, N. (2002), “Trade Liberalization, Exit, and Productivity Improvements: Evidence
from Chilean Plants”, Review of Economic Studies 69, January, pp. 245-76.
• * Bernard, Andrew, Bradford Jensen and Peter Schott (2007). "Importers, Exporters, and
Multinationals: A Portrait of Firms in the U.S. that Trade Goods," Dartmouth Tuck mimeo.
• * Bernard, Andrew B., J. Bradford Jensen, Stephen J. Redding and Peter K. Schott, "Firms in
International Trade," Journal of Economic Perspectives, 2007, 21(3), 105-130.
• * Roberts, Mark and James Tybout (1997). "The Decision to Export in Colombia: An Empirical
Model of Entry with Sunk Costs," American Economic Review, 87(4), p.545-564.
• Bernard A. and J. B. Jensen (2004). "Why Some Firms Export," The Review of Economics and
Statistics, 86(2).
• Bernard, Andrew and Bradford Jensen (1999). "Exceptional Exporter Performance: Cause,
Effect, or Both?" Journal of International Economics, 47(1), p.1-25.
• Baldwin, Richard and James Harrigan (2007). "Zeros, Quality and Space: Trade Theory and
Trade Evidence," NBER Working Paper No. 13214.
• Bernard and Jensen (1995). "Exporters, Jobs and Wages in U.S. Manufacturing, 1976-1987,"
Brookings Papers on Economic Activity: Microeconomics.
• Eaton, Jonathan, Marcela Eslava, Maurice Kugler and James Tybout (2008). "The Margins of
Entry into Exports Markets: Evidence from Columbia," in E. Helpman, D. Marin and T. Verdier,
eds., The Organization of Firms in a Global Economy, forthcoming, Harvard University Press.
• Eaton, Jonathan, Samuel Kortum and Francis Kramarz (2004a). "An Anatomy of International
Trade: Evidence from French Firms," New York University mimeo.
• Tybout, James (2001). "Plant- and Firm-level Evidence on the New Trade Theories," in E. Kwan
Choi and James Harrigan, ed., Handbook of International Trade, Oxford: Basil-Blackwell, 2003,
and NBER Working Paper No. 8418.
Multi-product firms:
• Arkolakis, Costas and Marc Muendler (2007). "The Extensive Margin of Exporting Goods: A
Firm-Level Analysis," UCSD mimeo.
• Bernard, Andrew, Stephen Redding and Peter Schott (2006a). "Multi-Product Firms and Product
Switching," Dartmouth Tuck mimeo.
• Bernard, Andrew, Stephen Redding and Peter Schott (2006b). "Multi-Product Firms and Trade
Liberalization," Dartmouth Tuck mimeo.
• Bernard, Andrew, Stephen Redding and Peter Schott (2006c). "Products and Productivity,"
Dartmouth Tuck mimeo.
• Eckel, C. and P. Neary, “"Multi-Product Firms and Flexible Manufacturing in the Global
Economy," Review of Economic Studies, forthcoming.
Third part: Other topics potentially covered
Offshoring, intermediate goods trade
• * Grossman, G., and E. Rossi-Hansberg, “Trading Tasks: A Simple Theory of Offshoring”,
American Economic Review, vol. 98(5), pages 1978-97, December.
• Antràs, Pol, Luis Garicano and Esteban Rossi-Hansberg (2006). "Offshoring in a Knowledge
Economy," Quarterly Journal of Economics, 121(1), p.31-77.
• Yeaple, S.R., "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade," Journal
of the European Economic Association, 2006, 4(2-3), 602-611.
• Yi, Kei-Mu (2003). "Can Vertical Specialization Explain the Growth of World Trade?" Journal of
Political Economy, 111(1), p.52-102.
• Johnson, R. and G. Noguera, “Fragmentation and Trade in Value Added Over Four Decades”,
• Fally, T. “Production Staging: Measurement and Evidence”, mimeo
• Costinot, A., J. Vogel and S. Wang "An Elementary Theory of Global Supply Chains", Review of
Economic Studies, forthcoming
Trade, demand-side and quality
• Caron J., T. Fally and J. Markusen, “Skill
production and preferences”.
premium and trade puzzles: a solution linking
Juan Carlos Hallak, 2010, "A Product-Quality View of the Linder Hypothesis," The
Review of Economics and Statistics, vol. 92(3), pages 453-466, August.
Fajgelbaum P., G. M. Grossman and E. Helpman, 2011 "Income Distribution, Product
Quality, and International Trade," Journal of Political Economy, v. 119(4), p721- 765.
Hummels D., P. J. Klenow, 2005, "The Variety and Quality of a Nation's Exports,"
American Economic Review, vol. 95(3), pages 704-723.
Trade and wage inequalities
• * Feenstra, R. and Hanson, G. (1996) ``Globalization, Outsourcing, and Wage Inequality",
American Economic Review Papers and Proceedings, vol. 96 no 2, pp. 240-45.
• Bustos, Paula (2006). "Rising Wage Inequality in the Argentinean Manufacturing Sector: The
Impact of Trade and Foreign Investment on Technology and Skill Upgrading," CREI mimeo.
Helpman, Elhanan, Oleg Itskhoki and Stephen Redding, "Inequality and Unemployment in a
Global Economy," mimeo, 2008.
Verhoogen, Eric (2004). "Trade, Quality Upgrading and Wage Inequality in the Mexican
Manufacturing Sector: Theory and Evidence from an Exchange-Rate Shock," Columbia
University mimeo.
Yeaple, Stephen (2005). "A Simple Model of Firm Heterogeneity, International Trade, and
Wages," Journal of International Economics, 65(1), p.1-20.
Institutions and trade
• ** Nunn, Nathan (2007). "Relationship-Specificity, Incomplete Contracts, and the Pattern of
Trade," Quarterly Journal of Economics, 122(2), p.569-600.
• Acemoglu, Daron, Pol Antràs and Elhanan Helpman (2005). "Contracts and Technology
Adoption," American Economic Review 97(3), p.916-943.
• Levchenko, Andrei (2007). "Institutional Quality and International Trade," Review of Economic
Studies, 74(3), p.791-819.
• Costinot, Arnaud (2008). "On the Origins of Comparative Advantage," Journal of International
• Levchenko, Andrei, “International Trade and Institutional Change”, NBER Working Paper No.
Financial constraints and trade
• * Antràs, Pol, Mihir Desai, and Fritz Foley (2007). "Multinational Firms, FDI Flows and
Imperfect Capital Markets," Harvard University mimeo.
• * Carluccio J. and T. Fally (2008) “Global Sourcing under Imperfect Capital Markets”
• * Manova, Kalina (2008). "Credit Constraints, Equity Market Liberalizations and International
Trade," Journal of International Economics, forthcoming.
• Antràs, Pol and Ricardo Caballero (2007). "Trade and Capital Flows: A Financial Frictions
Perspective," Harvard University mimeo.
• Desai, Mihir, Fritz Foley and Kristin Forbes (2006). "Financial Constraints and Growth:
Multinational and Local; Firm Responses to Currency Depreciations," Review of Financial
Studies, forthcoming.
• Do, Quy-Toan and Andrei Levchenko (2007). "Comparative Advantage, Demand for External
Finance, and Financial Development," Journal of Financial Economics, 86(3), p.796-834.
• Manova, Kalina, "Credit Constraints, Heterogeneous Firms and International Trade," Review of
Economic Studies, forthcoming.
• Paravisini D., V. Rappoport, P. Schnabl and D. Wolfenzon (2011), "Dissecting the Effect of
Credit Supply on Trade: Evidence from Matched Credit-Export Data," NBER Working Papers
Trade and the 2008 global crisis
• The Great Trade Collapse: Causes, Consequences, and Prospects”, ed. by R. Baldwin,.
VoxEU.org. In particular: chapters 8, 9, 11
• Manova, K. and D. Chor, "Off the Cliff and Back: Credit Conditions and International Trade
during the Global Financial Crisis", mimeo
• Eaton, J., S. Kortum, B. Neiman, and J. Romalis (2010): “Trade and the Great Recession”, mimeo
Trade policy
• ** Feenstra, 2003, chapters 7 and 9
• ** Bagwell, Kyle, and Robert W. Staiger. 1999. “An Economic Theory of GATT.” American
Economic Review, 89(1): 215–48.
• ** Broda, C, N Limao and D. Weinstein, “Optimal Tariffs and Market Power: The Evidence”
American Economic Review, 2008
• * Koujianou Goldberg, P. and G. Maggi, “Protection for Sale: An Empirical Investigation,”
American Economic Review 89(5): 1135-55, December 1999.
• * Grossman, G.M. and E. Helpman, “Protection for Sale,” American Economic Review,
September 1994, 84(4), 833-50.
• Bagwell, Kyle, and Robert W. Staiger. 2006. “What Do Trade Negotiators Negotiate About?”
Empirical Evidence from the World Trade Organization. National Bureau of Economic Research
Working Paper 12727.
• Grossman, G.M. and E. Helpman, “The Politics of Free Trade Agreements,” American Economic
Review, September 1995, 84(4), 667-90.
Other topics (probably not covered):
Trade, Innovation and Growth:
• Grossman, G.M. and E. Helpman, 1991
• Feenstra, 2003, Chapter 10.
• Baldwin, R and F. Robert-Nicoud “Trade and growth with heterogenous firms”, Journal of
International Economics 74(1), pp.21-34 (January 2008).
• Frankel, Jeffrey A. and Romer, David, “Does Trade Cause Growth?” American Economic
Review, June 1999, 89(3), 379-399.
• Keller, W., “International Technology Diffusion”, Journal of Economic Literature 2004.
• Rodriguez, Francisco and Rodrik, Dani, “Trade Policy and Economic Growth: A Skeptic’s Guide
to the Cross-National Evidence,” NBER Macroeconomics Annual, Vol. 15, 2001.
Labor markets and trade
• * Cuñat, Alejandro and Marc Melitz (2007). "Volatility, Labor Market Flexibility and
Comparative Advantage," NBER Working Paper #13062.
• * Helpman, Elhanan and Oleg Itskhoki (2007). "Labor Market Rigidities, Trade and
Unemployment," Harvard University mimeo.
• Davidson, Carl, Lawrence Martin and Steven Matusz (1999). "Trade and Search Generated
Unemployment," Journal of International Economics 48, p.271-299.
• Davis, Donald (1998). "Does European Unemployment Prop Up American Wages? National
Labor Markets and Global Trade," American Economic Review 88, p.478-494.
• Davis, Donald and James Harrigan (2007). "Good Jobs, Bad Jobs, and Trade Liberalization,"
Columbia University mimeo.
Trade and Networks:
• * Chaney, Thomas, "The Network Structure of International Trade".
• Rauch, J., and V. Trindade, “Information, Substitutability, and Globalization”, American
Economic Review 2003.
• Rauch, A. (1999) ``Networks Versus Markets in International Trade" Journal of International
Economics 48, 7-35.
References on multinational firms (not to be covered in Fall)
Horizontal FDI
• ** Helpman, Elhanan, Marc Melitz, and Stephen Yeaple (2004). "Exports versus FDI with
Heterogeneous Firms," American Economic Review, 94(1), p.300-316.
• * Brainard, Lael (1997). "An Empirical Assessment of the Proximity-Concentration Trade-off
Between Multinational Sales and Trade," American Economic Review, 87(4), p.520-544.
• * Markusen, James (1984). "Multinationals, Multi-Plant Economies, and the Gains from Trade,"
Journal of International Economics, 16, p.205-226.
• * Markusen, James and Anthony Venables (2000). "The Theory of Endowment, Intra-industry
and Multi-national Trade," Journal of International Economics, 52, p.209-234.
• Ethier, J.W. and J.R. Markusen, “Multinational Firms, Technology Diffusion and Trade,” Journal
of International Economics, 1996.
• Markusen, James (1995). "The Boundaries of Multinational Enterprises and the Theory of
International Trade," Journal of Economic Perspectives, 9(2), p.169-189.
• Markusen, James and Anthony Venables (1998). "Multinational Firms and the New Trade
Theory," Journal of International Economics, 46(2), p.183-203.
• Markusen, James (2002). "Multinational Firms and the Theory of International Trade,
Cambridge, MA, MIT Press.
• Ramondo, Natalia (2007). "Size, Geography, and Multinational Production," University of Texas
at Austin mimeo.
Offshoring, vertical FDI,
• * Grossman, G., and E. Rossi-Hansberg, “Trading Tasks: A Simple Theory of Offshoring”, AER,
• * Antràs, Pol, Luis Garicano and Esteban Rossi-Hansberg (2006). "Offshoring in a Knowledge
Economy," Quarterly Journal of Economics, 121(1), p.31-77.
• * Hanson, Gordon, Raymond Mataloni and Matthew Slaughter (2001). "Expansion Strategies of
U.S. Multinational Firms," in Dani Rodrik and Susan Collins, eds., Brookings Trade Forum 2001,
pp. 245-282.
• * Helpman, Elhanan (1984). "A Simple Theory of International Trade with Multinational
Corporations," Journal of Political Economy, 92(3), p.451-471.
• * Yeaple, Stephen (2003b). "The Complex Integration Strategies of Multinationals and Cross
Country Dependencies in the Structure of FDI," Journal of International Economics, 60, p.293314.
• Carr, David, James Markusen and Keith Maskus (2001). "Estimating the Knowledge-Capital
Model of the Multinational Enterprise," American Economic Review, 91(3), p.693-708.
• Grossman, G. M. and E. Helpman (2003) ``Outsourcing versus FDI in Industry Equilibrium",
Journal of the European Economic Association, vol. 1, no.2.
• Helpman, Elhanan and Paul Krugman (1985). Market Structure and Foreign Trade, Cambridge,
MA: MIT Press. Chapter 12.
• Nunn, Nathan and Daniel Trefler, “The Boundaries of the Multinational Firm: An Empirical
Analysis,” in E. Helpman, D. Marin, and T. Verdier (eds.), The Organization of Firms in a Global
Economy (Cambridge, MA: Harvard University Press), 2008.
• Yeaple, S.R., "Offshoring, Foreign Direct Investment, and the Structure of U.S. Trade," Journal
of the European Economic Association, April-May 2006, 4(2-3), 602-611.
• Yi, Kei-Mu (2003). "Can Vertical Specialization Explain the Growth of World Trade?" Journal of
Political Economy, 111(1), p.52-102.
Incomplete contracts and multinational production
• ** Antràs, P., “Firms, Contracts, and Trade Structure,” Quarterly Journal of Economics, 2003,
• ** Antràs, P. and E. Helpman, “Global Sourcing,” Journal of Political Economy 112(3), 2004,
• * Antràs, Pol and Esteban Rossi-Hansberg, "Organizations and Trade," 2008, forthcoming in
Annual Review of Economics.
• Antras, P. (2005) “Incomplete Contracts and the Product Cycle," American Economic Review,
Vol. 95, No. 4, September, pp. 1054-1073.
• Grossman, S. and Hart, O. (1986) “The Costs and Benefits of Ownership: A Theory of Vertical
and Lateral Integration", Journal of Political Economy 94 (4).
• Hart, O. and Moore, J. (1990) ``Property Rights and the Nature of Firms", Journal of Political
Economy 98.
Host economy effect of FDI
• Aitken, B. and Harrison, A. (1999), "Do Domestic Firms Benefit from Direct Foreign
Investment? Evidence from Venezuela", American Economic Review, Vol. 89.
• Carluccio, J. and T. Fally (2012), “Foreign Entry and Spillovers with Technological
Incompatibilities in the Supply Chain”, Journal of International Economics, forth.
• Kee, H. L. “Local Intermediate Inputs and the Shared Supplier Spillovers of Foreign Direct
Investment”, mimeo, World Bank.
• Javorcik Smarzynska B (2004), "Does Foreign Direct Investment Increase the Productivity of
Domestic Firms? In Search of Spillovers through Backward Linkages", American Economic
Review, Vol. 94.
• Markusen, J., and Venables, A.(1999), “Foreign direct investment as a catalyst for industrial
development”, European Economic Review, Vol. 43.
• Rodriguez-Clare, A. (1996) "Multinationals, Linkages, and Economic Development", American
Economic Review, Vol. 86.
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