Discriminating Among Alternative Theories of the Multinational Enterprise
Recent theoretical developments have incorporated endogenous multinational firms into the general-equilibrium model of trade. One simple taxonomy separates the theory into vertical' models in which firms geographically separate activities by stages of production and horizontal' models of multi-plant firms which duplicate roughly the same activities in many countries. We refer to a hybrid of these two as the 'knowledge capital model'. In this paper, we nest these three models within an unrestricted model. Econometric tests give strong support to the horizontal model and overwhelming reject the vertical model.
|Date of creation:||Jun 1999|
|Publication status:||published as Topics in Empirical International Economics, Blomstrom, M. and L.Goldberg,eds., Chicago: University of Chicago Press, 2000, forthcoming.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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