Globalization of firms : Theory and Applications

Ects : 3
Volume horaire : 21
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%)
Pré-requis obligatoires :
Basic knowledge of International Trade theories and econometrics

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?

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.

Enseignant responsable :