IDEAS home Printed from https://ideas.repec.org/a/kap/iaecre/v25y2019i4d10.1007_s11294-019-09758-z.html
   My bibliography  Save this article

Externalities from Intra-Firm Trade by U.S. Multinationals

Author

Listed:
  • Hrishikesh D. Vinod

    (Fordham University)

  • P. M. Rao

    (Long Island University, Post Campus)

Abstract

The share of world trade attributed to intra-firm trade is large and fast-growing. This paper offers new information on the welfare outcome of these trends. Two-country evaluations of the gains from international trade were replaced by local welfare measured, not only by the usual per capita income, but also by a newly available index of happiness which incorporates measures for non-economic human welfare. With the aid of large panel data and Hicksian production theory tools, we estimated positive marginal elasticities and a positive elasticity of substitution between intra-firm trade in goods and services. Kernel causality defined in a new R package helped quantify positive externalities from a selected set of 24 variables related to local welfare. Hence, we conclude that multinationals make a positive impact on local welfare.

Suggested Citation

  • Hrishikesh D. Vinod & P. M. Rao, 2019. "Externalities from Intra-Firm Trade by U.S. Multinationals," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(4), pages 389-397, November.
    • Handle: RePEc:kap:iaecre:v:25:y:2019:i:4:d:10.1007_s11294-019-09758-z
    DOI: 10.1007/s11294-019-09758-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11294-019-09758-z
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11294-019-09758-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David L. Carr & James R. Markusen & Keith E. Maskus, 2021. "Estimating The Knowledge-Capital Model of the Multinational Enterprise," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 5, pages 95-110, World Scientific Publishing Co. Pte. Ltd..
    2. Arnaud Costinot & Andrés Rodríguez-Clare, 2018. "The US Gains from Trade: Valuation Using the Demand for Foreign Factor Services," Journal of Economic Perspectives, American Economic Association, vol. 32(2), pages 3-24, Spring.
    3. Holger Breinlich & Anson Soderbery & Greg C. Wright, 2018. "From Selling Goods to Selling Services: Firm Responses to Trade Liberalization," American Economic Journal: Economic Policy, American Economic Association, vol. 10(4), pages 79-108, November.
    4. David E Allen & Vince Hooper, 2018. "Generalized Correlation Measures of Causality and Forecasts of the VIX Using Non-Linear Models," Sustainability, MDPI, vol. 10(8), pages 1-15, August.
    5. Shurong Zheng & Ning-Zhong Shi & Zhengjun Zhang, 2012. "Generalized Measures of Correlation for Asymmetry, Nonlinearity, and Beyond," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 107(499), pages 1239-1252, September.
    6. Theresa Carpenter, 2005. "Multinationals, intra-firm trade and FDI: A simple model," IHEID Working Papers 01-2005, Economics Section, The Graduate Institute of International Studies.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. H. D. Vinod, 2023. "Correction to: Generalized, Partial and Canonical Correlation Coefficients," Computational Economics, Springer;Society for Computational Economics, vol. 61(2), pages 897-897, February.
    2. Han Lin Shang & Kaiying Ji & Ufuk Beyaztas, 2021. "Granger causality of bivariate stationary curve time series," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 40(4), pages 626-635, July.
    3. H. D. Vinod, 2022. "Generalized, Partial and Canonical Correlation Coefficients," Computational Economics, Springer;Society for Computational Economics, vol. 60(4), pages 1479-1506, December.
    4. David E. Allen, 2022. "Cryptocurrencies, Diversification and the COVID-19 Pandemic," JRFM, MDPI, vol. 15(3), pages 1-25, February.
    5. Zouheir El-Sahli & Joakim Gullstrand & Karin Olofsdotter, 2018. "Exploring outward FDI and the choice of destination: evidence from Swedish firm-level data," Applied Economics Letters, Taylor & Francis Journals, vol. 25(17), pages 1222-1225, October.
    6. Aizenman, Joshua, 2003. "Volatility, employment and the patterns of FDI in emerging markets," Journal of Development Economics, Elsevier, vol. 72(2), pages 585-601, December.
    7. Joseph Francois & Bernard Hoekman, 2010. "Services Trade and Policy," Journal of Economic Literature, American Economic Association, vol. 48(3), pages 642-692, September.
    8. Badinger, Harald & Egger, Peter, 2013. "Spacey Parents and Spacey Hosts in FDI," Department of Economics Working Paper Series 154, WU Vienna University of Economics and Business.
    9. Chen, Maggie Xiaoyang & Lin, Chuanhao, 2020. "Geographic connectivity and cross-border investment: The Belts, Roads and Skies," Journal of Development Economics, Elsevier, vol. 146(C).
    10. Ariu, Andrea & Breinlich, Holger & Corcos, Gregory & Mion, Giordano, 2019. "The interconnections between services and goods trade at the firm-level," Journal of International Economics, Elsevier, vol. 116(C), pages 173-188.
    11. Dorothée Rouzet & Sebastian Benz & Francesca Spinelli, 2017. "Trading firms and trading costs in services: Firm-level analysis," OECD Trade Policy Papers 210, OECD Publishing.
    12. Assaf Razin & Efraim Sadka, 2007. "Productivity and Taxes as Drivers of FDI," Working Papers 172007, Hong Kong Institute for Monetary Research.
    13. Sosa Andrés, Maximiliano & Nunnenkamp, Peter & Busse, Matthias, 2013. "What drives FDI from non-traditional sources? A comparative analysis of the determinants of bilateral FDI flows," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-53.
    14. Ufuk Akcigit & Sina T. Ates & Giammario Impullitti, 2018. "Innovation and Trade Policy in a Globalized World," NBER Working Papers 24543, National Bureau of Economic Research, Inc.
    15. Beugelsdijk, Sjoerd & Slangen, Arjen & Maseland, Robbert & Onrust, Marjolijn, 2014. "The impact of home–host cultural distance on foreign affiliate sales: The moderating role of cultural variation within host countries," Journal of Business Research, Elsevier, vol. 67(8), pages 1638-1646.
    16. S, Minkyu., 2021. "The impact of trade on R&D: Evidence from UK firms," Cambridge Working Papers in Economics 2151, Faculty of Economics, University of Cambridge.
    17. Derek Kellenberg & Arik Levinson, 2019. "Misreporting trade: Tariff evasion, corruption, and auditing standards," Review of International Economics, Wiley Blackwell, vol. 27(1), pages 106-129, February.
    18. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    19. Bang Nam Jeon & Linghui Tang, 2005. "Information Technology and Bilateral FDI: Theory and Evidence," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 20, pages 613-630.
    20. Alvaro Pereira & João Jalles & Martin Andresen, 2012. "Structural change and foreign direct investment: globalization and regional economic integration," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 11(1), pages 35-82, April.

    More about this item

    Keywords

    Happiness index; Global sourcing; U.S. foreign subsidiaries; Kernel causality; Nonlinearities;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:iaecre:v:25:y:2019:i:4:d:10.1007_s11294-019-09758-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.