Date of Award

5-2010

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Dr. Michael Ryan

Second Advisor

Dr. Donald Alexander

Third Advisor

Dr. Debasri Mukherjee

Fourth Advisor

Dr. Andfzej Cieslik

Abstract

This dissertation examines the relationship between destination country characteristics and Chilean firm characteristics on the export destination decisions of Chilean firms. Additionally, it explores the impact generated by inward foreign direct investment (FDI) on Chilean firms' export decisions, wages, and productivity.

For the first study, a random coefficients logit approach is employed to model export likelihood to a particular destination country. From this, estimates of export substitution elasticities among destination countries are obtained, given changes in some of their macroeconomic variables such as GDP. Both destination country and the Chilean firms' characteristics are shown to be relevant in the export destination decisions. Increases in destination country GDP and Chilean firms' productivity increase export probability, while lower export probability occurs to countries with more open industries. Also, increases in destination country GDP lead to export substitution from other countries, although the extent to which this occurs differs by destination country and industry characteristics.

The second study evaluates the presence of spillover effects on the exporting decisions of Chilean firms. Evidence exists that the likelihood that a Chilean firm's decision to become an exporter is affected positively by other domestic firms' exports, but negatively by the export decisions of foreign-owned multinational firms (MNE's) operating in Chile. However, the MNE's employment generates positive export spillover effects, suggesting externalities in human capital. There is also some evidence of spillovers from MNE's activity on the amount the Chilean firms decide to export.

Finally, the third study investigates the presence of wage and productivity spillover effects from inward FDI, and explores the link between the two by testing whether wages are affected through productivity spillovers. Overall, the evidence suggests that inward FDI affects other Chilean firms' wages and productivity. The results show that there are positive intra-region wage spillovers, and negative intra-industry wage spillovers. Opposite results are found for productivity spillovers. Thus, it appears that a firm becomes more productive as a result of the presence of foreign firms operating in the same industry but not in the same region. This can be explained by similarities in production processes in the same industry, and by higher competition for scarce resources taking place in a particular region.

Access Setting

Dissertation-Open Access

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