Explaining the Export Intensity of Multinational Subsidiaries: an Eu-based Empirical Study

The paper investigates the FDI-trade relationship, and tests empirically (in a cross-country EU setting) the key determinants of the export intensity of multinational (MNE) subsidiaries. The central focus is the link between the strategic roles and characteristics of MNE subsidiaries, and their export patterns. Expectations about high export intensities of rationalized manufacturers and product mandate subsidiaries are confirmed, as well as the negative association between miniature replicas and exports. A crucial finding is the negative relationship between value-added scope (measured by autonomy and specialized capabilities) and export intensity. Subsidiaries which are relatively larger, more recently established, and located in smaller markets, are also more export-oriented. The results indicate that exports per se are not automatically beneficial from the perspective of host country impact, and challenge conventional wisdom on the effectiveness of conventional export-promotion policies.