The Structure of Multinational Firms' International Activities

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Title: The Structure of Multinational Firms' International Activities
Authors: Davies, Ronald B.Markusen, James R.
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Date: 15-Feb-2020
Online since: 2020-07-23T11:08:03Z
Abstract: The structure of a multinational firm, that is how its affiliates relate to one another, is critical for understanding where multinationals locate, how policy affects them, and their resilience to localized shocks. Here, we review the two main structures – market-seeking horizontal and cost-difference exploiting vertical investment – prevalent in the literature. In addition, we use data (primarily from the US) to examine which of these structures seems to dominate the data. This includes a novel use of measures of global value chain positioning of a country's industries. In each case, the data suggests a dominant role for horizontal investment. We conclude with a discussion of the challenge that intangibles play in multinational data and point towards potentially fertile areas for future research.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 54
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2020/05
Copyright (published version): 2020 the Author
Keywords: Foreign direct investmentMultinational corporationsHorizontal FDIVertical FDIGlobal value chains
metadata.dc.subject.classification: F23; F14
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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