Knowledge Capital, International Trade, And Foreign Direct Investment: A Sectoral Analysis
AbstractThe knowledge-capital (KC) model of MNEs is now a widely adopted empirical approach to explaining the location and production decisions of global firms based on both horizontal and vertical motivations. While most of the existing studies have focused on highly aggregated national data, we extend this model to sectoral data consisting of broad manufacturing industries and explicitly account for the dynamic nature of international investment data. The empirical results from a dynamic panel data analysis indicate that that the predictions of the KC model regarding MNE behavior vary by the type of industry. Production processes in electronics and transportation-equipment are more characterized by efficient vertical specialization of R&D activities and assembly, while other sectors display more complex motivations.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 50 (2012)
Issue (Month): 3 (07)
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Other versions of this item:
- Titus O. Awokuse & Keith E. Maskus & Yiting An, 2010. "Knowledge-Capital, International Trade and Foreign Direct Investment: A Sectoral Analysis," Working Papers 10-11, University of Delaware, Department of Economics.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
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