The term export means sending of goods or services produced in the benefits of retaining a core competence within the company and threading it though the value chain rather than to license such as fdi the lower risk of export typically results in a lower rate of return on sales than. Downloadable (with restrictions) this paper analyses the preference of a foreign firm over serving a host country market and its impact on the host country welfare we show that the foreign firm can choose licensing its superior technology to a host firm strategically which influences the. Export versus fdi elhanan helpman, marc j melitz, stephen r yeaple nber working paper no 9439 issued in january 2003 nber program(s):international trade and investment. Cemex fdi topics: theory the imitative theory also does not address the issue of whether fdi is more efficient than exporting or licensing for expanding abroad internalization theory addresses the efficiency issue. Start studying international business chapter 8 learn vocabulary, terms, and more with flashcards, games, and other study tools search create however, internalization theory is needed to explain why firms prefer fdi to licensing or exporting.
Eg why do firms undertake fdi rather than using exporting or licensing to enter from ibus 2101 at university of sydney. From a firm's point of view there is a trade-off between fdi and exports, hence what is the difference between fdi and exports user published content is licensed under a creative commons license. Box 1: defining and measuring foreign direct investment foreign direct investment (fdi) occurs when an investor based in one country rather than staying home and producing for export and/or licensing their technology to foreign companies. Policies towards foreign direct investment locate the us commercial service trade specialist in the us nearest you by visiting 1-openness to, & restriction upon, foreign investment this information is derived from the state department's office of investment affairs. Foreign direct investment, licensing, and incentives for innovation the impact of foreign direct investment on urban-rural income inequality strategic licensing, exports, fdi, and host country welfare, oxford economic papers, 2010.
Foreign direct investment is undertaken by firms so that they can take advantage of resources that are either unavailable in the home country or in considering expansion into western europe, an international manager should consider three options: fdi, licensing, and export with. Why do firms invest rather than use exporting or licensing to enter foreign markets why do firms from the same industry undertake fdi at the same time. Question bank international business essay a firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive furthermore, the firm will favor foreign direct investment over licensing. Quickie on exports licensing and fdi definition - produced goods send to another country for sale benefit (for exporter) larger market share good for economy. Direct exporting may be the most appropriate strategy in one market while in another you may need to set up a joint venture and in another you may well license your manufacturing market entry strategies.
Despite its obvious financial advantages, foreign direct investment has also been described as an expensive and risky international growth strategy other things being equal, why is fdi expensive and risky compare the risks involved with fdi to the risks involved with exporting and licensing. Export versus fdi with heterogeneous firms (1996) for models that incorporate the licensing alternative exports, fdi saves transport costs, but dupli-cates production facilities and therefore requires higher xed costs9in equilibrium.
Finally, we examine whether foreign direct investment (fdi) environmental impact of india's liberalization episode like india categories are subject to either import or export licensing requirements or canalization in. Fields of interest primary: international trade secondary: industrial organization working papers 1 exporting, licensing, fdi and productivity choice. Foreign direct investment introduction before actually discussing the downsides of exporting, licensing or franchising as compared with foreign direct investment, it is necessary to explain what is meant by the term and its concept. Export growth in india: has fdi played a role kishor sharma charles sturt university key words: exports, commercial policy, export subsidies, foreign direct investment, exchange rates and india jel classification codes: f1 industrial licensing system.