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Multinational Firms, Integration and Economic Growth

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Author Info
José Pedro Pontes

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Abstract

The importance and the impacts of horizontal multinational corporations in the context of integration and economic growth processes are examined. A noncooperative game with two firms that choose to have either one or two plants located in two asymmetric countries is used. The firms compete purely through location. Economic integration has an ambiguous impact upon foreign direct investment. On one hand, it decreases trade costs and easies the access to foreign markets through exports. On the other hand, through economic growth, it increases the size of the markets with relation to plant fixed costs and makes multinationals economically feasible. The latter effect, entails a decentralisation of production towards the smaller country.

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Publisher Info
Paper provided by Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon. in its series Working Papers with number 2001/11.

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Date of creation: 2001
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Handle: RePEc:ise:isegwp:wp112001

Contact details of provider:
Postal: Department of Economics, School of Economics and Management (ISEG), Technical University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: http://www.iseg.utl.pt/departamentos/economia/

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Related research
Keywords: Multinationals; Location; Noncooperative games.;

Find related papers by JEL classification:
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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This page was last updated on 2009-10-23.

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