Modeling FDI: tariff jumping and export platforms

We develop a pair of industry-specific partial equilibrium models of trade policy thatestimate how changes in tariff rates affect FDI. The models focus on two differenttypes of FDI. Tariff-jumping FDI is likely to expand with a large increase in the tariff ratein export markets, while export platform FDI is likely to contract with a large increasein the tariff rate on returning imports of offshored production. We run a series ofsimulations to demonstrate how the models work.