Fajgelbaum, Pablo; Grossman, Gene M.; Helpman, Elhanan - In: Review of Economic Studies 82 (2015) 1, pp. 83-121
We study patterns of foreign direct investment (FDI) in a multi-country world economy. We develop a model featuring non-homothetic preferences for quality and monopolistic competition in which specialization is purely demand-driven and the decision to serve foreign countries via exports or FDI...