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

13 Pages Posted: 8 May 2014

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: May 2014

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 per cent more goods to up to 31 per cent more countries.

Suggested Citation

Raff, Horst and Wagner, Joachim, Foreign Ownership and the Extensive Margins of Exports: Evidence for Manufacturing Enterprises in Germany (May 2014). The World Economy, Vol. 37, Issue 5, pp. 579-591, 2014, Available at SSRN: https://ssrn.com/abstract=2434345 or http://dx.doi.org/10.1111/twec.12157

Horst Raff (Contact Author)

Christian-Albrechts-Universitaet zu Kiel ( email )

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