Effects of overseas production on home country exports: Evidence based on Swedish multinationals

Using unique data on Swedish multinationals 1974-1990, the impacts of overseas production on parent exports are: analyzed. Two methodological applications art introduced: (i) In order to avoid sample selection bias, the model includes also countries to which the firm exports, but has not established any affiliates; (ii) the effect of affiliate exports to ''third countries'' is incorporated. The results suggest that increased foreign production both replaces exports of finished goods and attracts intermediate goods from the parent. In contrast to previous studies, the net effect is negative, albeit significant only in the case of affiliate exports in the EC.