Hidden Bibliographic Details
| Other authors / contributors: | Patnaik, Ila, author.
Shah, Ajay, author.
International Monetary Fund, issuing body.
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| ISBN: | 1283561328
9781283561327
9781455229673
1455229679
9781455211715
1455211710
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| Notes: | Includes bibliographical references.
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| Summary: | In the literature on exports and investment, most productive firms are seen to invest abroad. In the Helpman et al. (2004) model, costs of transportation play a critical role in the decision about whether to serve foreign customers by exporting, or by producing abroad. We consider the case of tradable services, where the marginal cost of transport is near zero. We argue that in the purchase of services, buyers face uncertainty about product quality, especially when production is located far away. Firm optimisation then leads less productive firms to self-select themselves for FDI. We test this prediction with data from the Indian software industry and find support for it.
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| Other form: | Print version: Fund, International Monetary. Export versus FDI in services. Washington : International Monetary Fund, ©2010 9781455211715
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