The knowledge-capital model acknowledges that FDI has both vertical as well as horizontal elements. However, there is much controversy with regard to the empirical relevance of vertical FDI. We re-investigate this issue by looking at FDI at a more disaggregated level, using data on bilateral FDI...

There is extensive empirical evidence pointing to the exsistence of sunk costs to exporting. Only higher productivity firms can profitably cover these and enter export markets. This is the standard explanation for the regularity with which econometric analyses reports that exporters are more...