"The current project seeks to answer how the overseas expansion of multinational retailers impacts the capacity of local (host country) firms to export. It focuses on multinational retailers from developed countries that establish operations in developing economies. In terms of theoretical modeling, it intends to add a retail sector in trade models with heterogeneous firms, and to unravel the link between the evolutions in the retail sector and the distribution of firms' productivity in the host country. For the empirical part, the integration of several host countries in the analysis and the use of firm-level data is intended in order to accurately measure the capability effect (the increase in exports due to productivity improvements of local firms), the linkage effect (the increase in exports due to the access of local firms to retailers’ foreign networks of outlets and contacts), as well as reveal new underlying mechanisms at work. Another objective of the project is to disentangle between effects on exports towards traditional and new foreign markets, and to evaluate the impacts in terms of the variety of goods produced and exported by host country firms. Finally, the project aims to understand how multinational retail chains adjust their supply policies to production shocks faced by their suppliers, and how these decisions explain retailers' trade-offs between low-cost suppliers from developing countries, and more reactive, more flexible suppliers from home and other developed economies. This is an innovative approach, because the existing literature focuses exclusively on firms’ responses to changes, shocks in the demand, emphasizing their focus on policies ensuring just-in-time delivery."
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