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The Growth Lab's Research Seminar series is a weekly seminar that brings together researchers from across the academic spectrum who share an interest in growth and development.
Speaker: Luis M. Espinoza Bardales, Ph.D. candidate in Economics from University of Michigan
Location: Online only. Please register in advance.
Abstract: This paper explores how contracting frictions and geography influence the trade costs faced by multinationals' affiliates located in Mexico relative to domestic firms. Luis documents two key facts. First, distance to firm’s home countries influences firms’ sourcing patterns. Second, sectors with a larger presence of foreign affiliates are more intensive in relationship-specific inputs. He develops a small open economy model with multiple sectors, imperfect contracting, input relationship-specificity, global sourcing and multinational production. Luis computes a set of counterfactual equilibria to gauge the relative importance of contracting frictions, trade costs, and productivity in the price advantage of multinationals over domestic firms. He finds small median differences between foreign and domestic firms regarding inward trade and contracting costs, with high variability across industries and home countries.
About the Speaker: Luis Espinoza is a Ph.D. candidate in Economics from University of Michigan. He is also a former Growth Lab Fellow (2014-2016) and holds a MPAID (2014) degree from HKS. He will be joining the International Affairs faculty at the Bush School of Government and Public Service at Texas A&M this Fall. Luis’ research interest lies at the intersection of trade and development. His research focuses on economic development from a sectorial/macro perspective, with an eye on potential lessons for policy.