FDI, Offshore Sourcing and Firm Heterogeneity: Perspectives of New Empirical Challenges

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Traditional trade theory and intra-industry trade theory do not sufficiently explain the recent increase of FDI and intra-industry trade between developed and developing countries. As it is not countries but firms that actually engage in trade and FDI, recent theoretical development of trade and FDI emphasizes that firm-level analysis is essential to explaining the recent growth in trade and FDI, and provides a new theoretical perspective of international trade and FDI with firm heterogeneity.This paper is purposed to review new theoretical and empirical challenges to recent international trade and FDI.

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