TRANSNATIONALS AND FOREIGN-TRADE - EVIDENCE FROM BRAZIL

A recursive model of exports and imports of manufactures, in which imports depend in part on exports, is estimated using data for a cross-section of 17,053 industrial firms. In this sample, 652 firms are foreign-owned. Explanatory variables include firm size, skill intensity, advertising and other variables in addition to foreign ownership. Foreign ownership has a large, independent effect on both export performance and import propensities, but foreign ownership in itself explains little of the relatively low export/import ratios registered by affiliates of transnationals.