Citation

Discussion Paper Details

Please find the details for DP4041 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Distance and FDI When Contracts are Incomplete

Author(s): Gianmarco Ottaviano and Alessandro Antonio Turrini

Publication Date: September 2003

Keyword(s): foreign direct investment, incomplete contracts and trade costs

Programme Area(s): International Trade and Regional Economics

Abstract: We introduce incomplete outsourcing contracts in an otherwise standard model of MNEs based on the trade-off between proximity and concentration. This has implications for the choice between export and FDI and the way this is affected by the distance between source and host countries. In particular, incomplete outsourcing contracts can account for the observed emergence of FDIs in large markets not only when trade costs are large but also when trade costs are small. Moreover, contractual incompleteness alters someway dramatically the choice of supply mode made when contracts are complete.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4041

Bibliographic Reference

Ottaviano, G and Turrini, A. 2003. 'Distance and FDI When Contracts are Incomplete'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4041