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Knowledge Capital, International Trade, And Foreign Direct Investment: A Sectoral Analysis

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  • TITUS O. AWOKUSE
  • KEITH E. MASKUS
  • YITING AN

Abstract

The 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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Suggested Citation

  • Titus O. Awokuse & Keith E. Maskus & Yiting An, 2012. "Knowledge Capital, International Trade, And Foreign Direct Investment: A Sectoral Analysis," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 707-723, July.
    • Handle: RePEc:bla:ecinqu:v:50:y:2012:i:3:p:707-723
    DOI: j.1465-7295.2011.00371.x
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    File URL: http://hdl.handle.net/10.1111/j.1465-7295.2011.00371.x
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    Cited by:

    1. Titus O. Awokuse & Weishi Grace Gu, 2015. "Does Foreign Intellectual Property Rights Protection Affect Us Exports And Fdi?," Bulletin of Economic Research, Wiley Blackwell, vol. 67(3), pages 256-264, July.
    2. Nune Hovhannisyan, 2019. "Technology Gap and International Knowledge Transfer: New Evidence from the Operations of Multinational Corporations," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(4), pages 612-638, October.
    3. Zoran Ivanovic & Suzana Baresa & Sinisa Bogdan, 2011. "Influence Of Fdi On Tourism In Croatia," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 2(1), pages 21-28.
    4. Andrzej Cieslik & Mahdi Ghodsi, 2021. "Economic sentiment indicators and foreign direct investment: Empirical evidence from European Union countries," International Economics, CEPII research center, issue 168, pages 56-75.
    5. Chellaraj,Gnanaraj & Mattoo,Aaditya & Chellaraj,Gnanaraj & Mattoo,Aaditya, 2015. "Can the knowledge capital model explain foreign investment in services ? the case of Singapore," Policy Research Working Paper Series 7186, The World Bank.
    6. Nguyen, Anh T.N. & Haug, Alfred A. & Owen, P. Dorian & Genç, Murat, 2020. "What drives bilateral foreign direct investment among Asian economies?," Economic Modelling, Elsevier, vol. 93(C), pages 125-141.

    More about this item

    JEL classification:

    • 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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