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Outsourcing and International Production of a Multinational: A Theoretical Model and Empirical Evidence from Toyota, Thailand Author info | Abstract | Publisher info | Download info | Related research | Statistics Witada Anukoonwattaka
A stylised partial equilibrium model of an MNC is developed. The model incorporates key aspects of outsourcing in a world of falling trade costs. The multinational, with firm-specific capital operates in two countries that differ in factor prices; it produces final goods with firm specific capital but can source multiple intermediate goods internally from each subsidiary (produced with firm-specific capital and labour), or outsource them from domestic or foreign suppliers. There is a potential trade off between scale of final good production and scope of in-house component production. Trade liberalization can affect both country and organization choices of the firm’s component sourcing and final-good production. We also use a previously unused data set on component trade of Toyota in Southeast Asia to conduct an empirical investigation informed by the model insights.
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Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number
c012_045.
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Length: 35 pages JEL Classification: F14, F15, F23, L22, L62
Date of creation: Jun 2007Date of revision:
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For technical questions regarding this item, or to correct its listing, contact: (Dr. Birgit Wolfrath).
Keywords: Intra-firm Trade ; Trade in intermediate inputs ; direct foreign investment ; multinational corporations and outsourcing ; This paper has been announced in the following NEP Reports :
This item is featured on the following reading lists :
Studies on the automobile industry
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.: Robert C. Feenstra & Gordon H. Hanson & Deborah L. Swenson, .
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Harvard Institute of Economic Research Working Papers
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Department of Economics
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Other versions:
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NBER Working Papers
9300, National Bureau of Economic Research, Inc.
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148, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics..
[Downloadable!]
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