In this paper, we model a manufacturing and a transport sector and use export volumes to determine the demand for transport services. If trade exceeds a particular level, transport service suppliers maximise profit by investing in an advanced transport technology, which lowers their marginal...

<heading id="h1" level="1" implicit="yes" format="display">ABSTRACT</heading> Changes in exchange rates affect countries through their impact on cross-border activities such as trade and foreign direct investment (FDI). With increasing activities of multinational firms, the FDI channel is likely to gain in importance. Economic theory provides two main...

<heading format="display" id="h1" implicit="yes" level="1">Abstract</heading> Firms cluster their economic activities to exploit technological and informational spillovers from other firms. Spillovers from multinational firms can be particularly beneficial to firms in less developed economies, because technological superiority and management expertise of foreign...