The Global Agglomeration of Multinational Firms
AbstractThe explosion of multinational activities in recent decades is rapidly transforming the global landscape of industrial production. But are the emerging clusters of multinational production the rule or the exception? What drives the offshore agglomeration of multinational firms? Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. Our analysis shows that the emerging offshore clusters of multinationals are not a simple reflection of domestic industrial clusters. Location fundamentals including market access and comparative advantage and under-emphasized agglomeration economies including capital-good market externality and technology diffusion play a particularly important role in multinationals' offshore agglomeration.
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Date of creation: Dec 2009
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- Maggie Xiaoyang Chen & Laura Alfaro, 2010. "The Global Agglomeration of Multinational Firms," Working Papers 2010-16, The George Washington University, Institute for International Economic Policy.
- Laura Alfaro & Maggie Chen, 2009. "The Global Agglomeration of Multinational Firms," Harvard Business School Working Papers 10-043, Harvard Business School, revised Apr 2010.
- D2 - Microeconomics - - Production and Organizations
- F2 - International Economics - - International Factor Movements and International Business
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-CSE-2009-12-19 (Economics of Strategic Management)
- NEP-URE-2009-12-19 (Urban & Real Estate Economics)
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