We investigate the trade-off between FDI and international outsourcing of interme-diate inputs by a producer of a final good. To this extent, we characterize an industry equilibrium where fixed sunk costs exist for the setting up of foreign subsidiaries and the latter are heterogeneous in...

A theoretical model of international location choice is analyzed in a context of regional economic integration in which, consistently with the most recent evidence, countries conclude multilateral free trade agreements. Controlling for individual country and industry characteristics, it is found...

We exploit a panel dataset of Hungarian firms merged with product-level trade data for the period 1992-2003 to investigate the relation between firms' trading activities (importing, exporting or both) and productivity. We find important self-selection effects of the most productive firms induced...