Multilateral trade liberalisation, foreign direct investment and the volume of world trade

Arbeitspapier

A paradox in international trade is that multilateral trade liberalisation has resulted in increases in both the volume of world trade and the amount of foreign direct investment (FDI). This note presents a Cournot duopoly model with two regions, each consisting of two countries, and with an inter-regional transport cost. It is shown that multilateral trade liberalisation may lead firms to switch from exporting to undertaking export-platform FDI when the interregional transport cost is high. Also, when the inter-regional transport cost is high, the switch to FDI leads to an increase in the volume of world trade in this industry.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Cardiff Economics Working Papers ; No. E2010/4

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Trade Policy; International Trade Organizations ; Multinational Firms; International Business
• Subject: Trade Liberalisation ; Foreign Direct Investment ; Cournot Oligopoly ; Internationale Handelspolitik ; Außenhandelsliberalisierung ; Direktinvestition ; Duopol ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Collie, David R.
• Event: Veröffentlichung
• (who): Cardiff University, Cardiff Business School
• (where): Cardiff
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/65728
• Last update: 10.03.2025, 11:42 AM CET