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Abstract.  This paper studies the relationship between multinational firm proximity and the formation of new export connections by private Chinese exporters between 1997 and 2003. The results indicate that growth in the presence of multinational firms is positively associated with the formation of new trade by local Chinese firms. Further exploration suggests that information spillovers may drive this result, as the positive association due to own‐industry multinational presence is particularly strong in contexts where information improvements may be the most helpful. Thus, it appears that a growing presence of multinational firms may enhance the export capabilities of local domestic firms.

Abstract.  How does international competition affect overseas outsourcing? To address this question, this paper studies production decisions in the U.S.'s overseas assembly program (OAP). In this setting, a number of regularities emerge. First, prior participation is highly correlated with current participation, which suggests that sunk costs influence outsourcing choices. Second, increases in own‐country costs and declines in competitor‐country costs reduce participation probabilities. In addition, these persistence and cost effects are much larger for outsourcing in developing countries. Finally, outsourcing responses appear to reflect differences in 'market thickness,' as cost sensitivity generally rises with competitor presence.

This article examines the input choices for producers who assemble their goods abroad and imported them to the United States through the U.S. Overseas Assembly Provisions. Three findings emerge. First, firms reduce their use of foreign parts and assembly when foreign costs rise, but only with a lag. In contrast, recent foreign cost increases boost the foreign portion of final product value. Second, the effects of cost changes are more pronounced for U.S. outsourcing imports from developing countries. Finally, the degree of production responsiveness differs with industry capital intensity and is the greatest for low‐capital intensity projects performed in non‐Organization for Economic Cooperation and Development (OECD) locations.