Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany

23 Pages Posted: 29 Jul 2013

See all articles by Horst Raff

Horst Raff

Christian-Albrechts-Universitaet zu Kiel; CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

Joachim Wagner

University of Lueneburg - Institute of Economics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; IZA Institute of Labor Economics

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Date Written: July 29, 2013

Abstract

We examine how foreign ownership of a firm affects the variety of goods that the firm exports and the number of countries it trades with. We construct a simple theoretical model of how foreign ownership may affect these extensive margins of exports and take this model to data from Germany, one of the leading actors on the world market for goods. In line with theoretical predictions we find that foreign-owned firms do export more goods to more countries after controlling for firm size, productivity and industry affiliation. These differences between foreign-owned firms and domestically controlled firms are highly statistically significant, and they are large from an economic point of view, with foreign-owned firms exporting up to 39% more goods to up to 31% more countries.

Keywords: international trade, foreign ownership, multinational enterprise, foreign direct investment, extensive margins of exports, Germany

JEL Classification: F140, F230

Suggested Citation

Raff, Horst and Wagner, Joachim, Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany (July 29, 2013). CESifo Working Paper Series No. 4337, Available at SSRN: https://ssrn.com/abstract=2302492

Horst Raff (Contact Author)

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