Globalization of firms : Theory and Applications

Ects : 3

Enseignant responsable :


Volume horaire : 21

Description du contenu de l'enseignement :
Understanding the optimal international strategy of firms is key for a deep comprehension of the ongoing globalization process. This course focuses on the economic factors driving the optimal international strategy of heterogeneous firms: when is it optimal to offshore production abroad? In which countries and how? When exporting is more efficient than offshoring? Which are the main trade obstacles for firm?

Pré-requis obligatoires :
Basic knowledge of International Trade theories and econometrics
Coefficient : 3
Compétence à acquérir :
At the end of the course, students are expected to have a good knowledge of the mechanisms underlying the determinants and the consequences of the optimal international strategy of firms. A dedicated applied session will provide students with basic econometric tools for international trade.
Mode de contrôle des connaissances :
The final evaluation is based on a participation (25%) and a final exam (75%)
Bibliographie, lectures recommandées
Lecture 1: The historical perspective of globalization and the role of firms
· Krugman P., Obstfeld M., and Melitz M., (2008). International Economics: Theory and Policy. Pearson, 9th Ed. Chapter 2: “World trade, an overview”.
· Baldwin, R. And Martin, P. (1999): “Two waves of globalization: superficial similarities, fundamental differences”, NBER Working Paper 6904.
Lecture 2: Micro-foundation of Multinational Enterprises (MNEs) and the optimal entry mode
· Beugelsdijk S., Brakman S., Garretsen H. and C. Van Marrewijk (2013) “International Economics and Business. Nations and Firms in the Global Economy”, ed. Cambridge University Press (second edition). Chapter 6.
· Krugman P., Obstfeld M., and Melitz M., (2008). International Economics: Theory and Policy. Pearson, 9th Ed. Chapter 6: "External Economies of Scale and the International Location of Production".
Lecture 3: The proximity-concentration trade-off
· Brainard, S.L. (1993) “A Simple Theory of Multinational Corporations with a Tradeoff between Proximity and Concentration”, NBER Working Paper 4269.
· Brainard, S.L. (1997) “An Empirical Assessment of the Proximity- Concentration Trade-off Between Multinational Sales and Trade,” American Economic Review, 87(4), pages 520-544.
Lecture 4: Export, FDI and Immigrant workers: the optimal strategy of heterogeneous firms
· Helpman, E., Melitz M. and S. Yeaple (2004) "Export Versus FDI with Heterogeneous Firms," American Economic Review, vol. 94(1), pag 300-316.
· Ottaviano, G.I.P, Peri G. and G.C. Wright (2013) "Immigration, Offshoring, and American Jobs," American Economic Review, vol. 103(5), pag 1925-1959.
· Mitaritonna, C., Orefice G. and G. Peri (2017) "Immigrants and firms’ outcomes: Evidence from France," European Economic Review, vol. 96(C), pag 62-82.
Lecture 5: Obstacles to trade: tariff and non-tariff barriers to firm’s exports
· Krugman P., Obstfeld M., and Melitz M., (2008). International Economics: Theory and Policy. Pearson, 9th Ed. Chapter 9: “The Instruments of Trade Policy”
· Baldwin, Richard (2013), “Multilateralising 21st century regionalism”, Paper written for OECD, available here:
· Fontagné, L. and G. Orefice (2017) "Let's Try Next Door: Technical Barriers to Trade and Multi-destination Firms", European Economic Review, 2018, vol. 101, pages 643-663
· Fontagné, L., Orefice G., Rocha N. and R. Piermartini (2015) "Product Standards and Margins of Trade: firm level evidence", Journal of International Economics, 2015, vol. 97(1), pages 29-44.
Lecture 6: Trade costs and the gravity model for trade: from macro to firm perspective
· Anderson J. (2011) “The Gravity Model”, The Annual Review of Economics, 3(1), pages 133-160.
· Anderson J. and E. van Wincoop (2003) “Gravity with gravitas : A solution to the border puzzle”, The American Economic Review 93(1), pages170-192
· Chaney T. (2008) “Distorted Gravity : the intensive and extensive margins of international trade,” American Economic Review, 98(4), pages 1707-21
Lecture 7: Gravity model for trade: data application using STATA
· Head, K. and T. Mayer (2014) “Gravity Equations : Workhouse, Toolkit, and Cookbook”, in Handbook of International Economics, Chapter 3.
· J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.