TY  - JOUR
AU  - Antràs,Pol
AU  - Foley,C. Fritz
TI  - Regional Trade Integration and Multinational Firm Strategies
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14891
PY  - 2009
Y2  - April 2009
UR  - http://www.nber.org/papers/w14891
L1  - http://www.nber.org/papers/w14891.pdf
N1  - Author contact info:
Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu

C. Fritz Foley
Graduate School of Business Administration
Harvard University
Soldiers Field
Boston, MA 02163
Tel: 617/495-6375
Fax: 617/496-8443
E-Mail: ffoley@hbs.edu
AB  - This paper analyzes the effects of the formation of a regional trade agreement on the level and nature of multinational firm activity. We examine aggregate data that captures the response of U.S. multinational firms to the formation of the ASEAN free trade agreement. Observed patterns guide the development of a model in which heterogeneous firms from a source country decide how to serve two foreign markets. Following a reduction in tariffs on trade between the two foreign countries, the model predicts growth in the number of source-country firms engaging in foreign direct investment, growth in the size of affiliates that are active in reforming countries both before and after the tariff reduction, and an increase in the extent to which the sales of affiliates in reforming countries are directed towards other reforming countries. Analysis of firm-level responses to the creation of the ASEAN free trade agreement yields results that are consistent with these predictions.
ER  -