The Global Agglomeration of Multinational Firms
AbstractThe proliferation of multinational activities has led to the emergence of new industrial clusters around the world. In this paper, we examine how "first nature" location fundamentals and "second nature" agglomeration economies jointly determine the global landscape of multinational firms. Using a unique worldwide plant dataset that reports detailed location, ownership, and operation information for plants in more than 100 countries, we construct a spatially continuous index of global agglomeration and investigate the patterns and determinants of clustering between multinational firms. Our analysis indicates that multinationals' agglomeration goes above and beyond first-nature driven geographic concentration. Second-nature forces including knowledge spillovers, capital-market externalities, and vertical production linkages play a significant role. In comparison to domestic plants, knowledge spillovers and capital market externalities exert a stronger effect on the clustering of multinational firms while labor market pooling has a weaker impact. These findings remain robust when we examine entry decisions and explore the process of agglomeration.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The George Washington University, Institute for International Economic Policy in its series Working Papers with number 2010-16.
Length: 45 pages
Date of creation: Jun 2010
Date of revision:
Publication status: Published in Harvard Business School BGIE Unit Working Paper No. 10-043
Multinational firm; agglomeration; first nature; second nature; input-output linkage; knowledge spillover; factor market externality;
Other versions of this item:
- Laura Alfaro & Maggie Chen, 2009. "The Global Agglomeration of Multinational Firms," Harvard Business School Working Papers 10-043, Harvard Business School, revised Apr 2010.
- Laura Alfaro & Maggie Chen, 2009. "The Global Agglomeration of Multinational Firms," NBER Working Papers 15576, National Bureau of Economic Research, Inc.
- F2 - International Economics - - International Factor Movements and International Business
- D2 - Microeconomics - - Production and Organizations
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- William R. Kerr & Scott Duke Kominers, 2010.
"Agglomerative Forces and Cluster Shapes,"
Harvard Business School Working Papers
11-061, Harvard Business School, revised Nov 2012.
- William R. Kerr & Scott Duke Kominers, 2012. "Agglomerative Forces and Cluster Shapes," Working Papers 12-09, Center for Economic Studies, U.S. Census Bureau.
- William R. Kerr & Scott Duke Kominers, 2010. "Agglomerative Forces and Cluster Shapes," NBER Working Papers 16639, National Bureau of Economic Research, Inc.
- Serafinelli, Michel, 2013.
"Good Firms, Worker Flows and Productivity,"
47508, University Library of Munich, Germany.
- Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.
- Lorenzo Burlon, 2012. "How Do Aggregate Fluctuations Depend on the Network Structure of the Economy?," Working Papers in Economics 278, Universitat de Barcelona. Espai de Recerca en Economia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kyle Renner).
If references are entirely missing, you can add them using this form.