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China and Global Development Seminar Series

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Institute for China and Global Development

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presents

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Firm Exports and Multinational Activity

under Credit Constraints
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by Prof. Kalina Manova

Stanford University

 

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September 9, 2011 (Friday)

4:30 p.m. to 6:00 p.m.

 

Room 910, KKL Building

The University of Hong Kong

Pokfulam Road, Hong Kong

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To view Prof. Kalina Manova's presentation slides, please click here.

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Remarks:  Non-HKU staff/students who are interested in attending this seminar, please register with Ms. Angelina Hung by sending your full name, affiliation and contact details to info@hiebs.hku.hk.  For enquiries, please call 2547 8472. 

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Abstract

This paper provides firm-level evidence that credit constraints restrict international trade flows and affect the pattern of foreign direct investment. Using detailed data from China, we show that foreign-owned affiliates and joint ventures have better export performance than private domestic firms, and that this advantage is systematically greater in sectors at higher levels of financial vulnerability measured in a variety of ways. These patterns are manifest in firms' export sales, export product scope and number of export destinations. They are also more pronounced when firms face higher trade costs. This evidence indicates that limited credit availability hinders firms' trade flows, and is consistent with foreign affiliates being less constrained because they can access additional funding from their parent company. Our results further imply that financial frictions and host-country financial institutions affect the sectoral and spatial composition of MNC activity. More broadly, our findings suggest that FDI can compensate for domestic financial market imperfections and alleviate their impact on aggregate growth, trade and private sector development.

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About the Speaker  

Kalina Manova is an Assistant Professor of Economics at Stanford University. She is also a Faculty Research Fellow at the National Bureau of Economic Research and a CESifo Institute affiliate. She received her Ph.D. from Harvard University in 2007 and her A.B. from Harvard College in 2002. In 2009-2010, she was a Visiting Assistant Professor of Economics at Princeton University as a Kenen Fellow in International Economics. Her research examines the consequences of credit constraints and underdeveloped financial markets for growth, international trade and multinational activity; the implications of equity market liberalizations and financial crises for cross-country trade flows; the importance of product quality for firmsˇ¦ export success; and the effects of outsourcing on sending economies.

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