EFFECTS OF OVERSEAS PRODUCTION ON HOME COUNTRY EXPORTS - EVIDENCE BASED ON SWEDISH MULTINATIONALS

Using unique data on Swedish multinationals 1974-1990, the impacts of overseas production on parent exports are: analyzed. Two methodologica l applications art introduced: (i) In order to avoid sample selection bias, the model includes also countries to which the firm exports, but has not established any affiliates; (ii) the effect of affiliate expo rts to ''third countries'' is incorporated. The results suggest that i ncreased foreign production both replaces exports of finished goods an d attracts intermediate goods from the parent. In contrast to previous studies, the net effect is negative, albeit significant only in the c ase of affiliate exports in the EC.