Trade and Development Seminar with Christian Volpe (Inter-American Development Bank)

Multinational firms' affiliates are typically larger, more productive, and more likely to export. Existing empirical evidence suggests that domestic firms that are connected to these affiliates tend to have better export outcomes. However, this evidence relies on firm-to-firm connections that are assumed based on country-level input-output matrices rather than actually observed. In this paper, we examine, whether and how linking up with multinational firms results in improved export performance for domestic firms, using a unique dataset that includes data on firm-to-firm purchases and sales both within and across countries. Our estimation results indicate that selling to a multinational firm is associated with a significant increase in the probability that a domestic firm starts to export, especially to a country where the respective multinational firm is headquartered or has an affiliate. This estimated effect is larger when the multinational firms themselves sell abroad and when the linkage intensity is higher.

https://www.christianvolpe.com/

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