earticle

영어

This paper compares and analyzes the relative impact of distance on intra-firm exports and imports using Korean firm-level data. We find the evidence that intra-firm exports from the perspective of affiliates are more sensitive to the distance effect than intra-firm imports. This can be justified on the premise that intra-firm exports are more likely to originate from vertical FDI, where the main motive is to save on trade (distance) costs. However, if distance costs are high, firms nullify the distance effect by offshoring their production facilities. The distance effect is not an important determinant in the case of horizontal FDI. Intra-firm imports are more likely to follow horizontal FDI. Our results imply that the distance effect may contain important information about the nature of FDI and can help to shape a firm’s business strategy.