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Expansion Strategies of U.S. Multinational Firms

  • Gordon H. Hanson
  • Raymond J. Mataloni, Jr.
  • Matthew J. Slaughter

Recent theoretical work tends to characterize multinational enterprises as arising through either horizontal or vertical foreign direct investment (FDI). Empirical research tends to find stronger support for the former than for the latter. In this paper, we use recent, detailed data on U.S. multinational firms to revisit the question of why multinationals go abroad. We examine three types of foreign activities of U.S. multinationals: global outsourcing, the use of export platforms, and wholesale trading. Our results suggest that vertical FDI is more common than previous research suggests, and more generally that the foreign affiliates of multinationals span a diverse set of activities that each respond to policies and characteristics of host countries in quite different ways.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8433.

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Date of creation: Aug 2001
Date of revision:
Publication status: published as Rodrik, Dani and Susan Collins (eds.) Brookings Trade Forum 2001. Brookings Institution Press, 2001.
Handle: RePEc:nbr:nberwo:8433
Note: ITI
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  7. Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
  8. Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-44, September.
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  17. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-94, December.
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