Multinational Firms and the Structure of International Trade
80 Pages Posted: 9 Feb 2013 Last revised: 21 Apr 2023
Date Written: February 2013
Abstract
This article reviews the state of the international trade literature on multinational firms. This literature addresses three main questions. First, why do some firms operate in more than one country while others do not? Second, what determines in which countries production facilities are located? Finally, why do firms own foreign facilities rather than simply contract with local producers or distributors? We organize our exposition of the trade literature on multinational firms around the workhorse monopolistic competition model with constant-elasticity-of-substitution (CES) preferences. On the theoretical side, we review alternative ways to introduce multinational activity into this unifying framework, illustrating some key mechanisms emphasized in the literature. On the empirical side, we discuss the key studies and provide updated empirical results and further robustness tests using new sources of data.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Nature and Growth of Vertical Specialization in World Trade
By David L. Hummels, Jun Ishii, ...
-
Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras
-
Integration vs. Outsourcing in Industry Equilibrium
By Gene M. Grossman and Elhanan Helpman
-
Firms, Contracts, and Trade Structure
By Pol Antras
-
The Evolving External Orientation of Manufacturing: A Profile of Four Countries
-
The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries
-
Can Vertical Specialization Explain the Growth of World Trade?
By Kei-mu Yi