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Intrafirm Trade of US MNCs: Findings and Implications for Models and Policies Toward Trade and Investment

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  • Feinberg, Susan
  • Keane, Michael

Abstract

Researchers have found mixed results on whether FDI generates positive spillovers that improve the efficiency of host country economies. We argue that these inconclusive results may be due (in part) to the substantial heterogeneity in MNC affiliate activity, which prior research has largely ignored. We examine one important source of heterogeneity - whether an affiliate is organized to trade intra-firm. In a descriptive analysis of affiliate activity in 49 developing countries from 1983 to 1996, we find that MNC affiliates that are organized to trade intra-firm differ in important ways from those that are note: They pay higher wages, they experience higher growth in PPE, and they are considerably more dynamic technologically.

Suggested Citation

  • Feinberg, Susan & Keane, Michael, 2005. "Intrafirm Trade of US MNCs: Findings and Implications for Models and Policies Toward Trade and Investment," MPRA Paper 55120, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:55120
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    References listed on IDEAS

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    1. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Local Technological Capability and Productivity Spillovers from FDI in the Uruguayan Manufacturing Sector," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 11, pages 177-186, Palgrave Macmillan.
    2. Susan E. Feinberg & Michael P. Keane & Mario F. Bognanno, 1998. "Trade Liberalization and Delocalization: New Evidence from Firm-Level Panel Data," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 749-777, November.
    3. Theodore H. Moran, 2001. "Parental Supervision: The New Paradigm for Foreign Direct Investment and Development," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa64, October.
    4. Magnus Blomström & Ari Kokko & Mario Zejan, 2000. "Technology, Market Characteristics and Spillovers," Palgrave Macmillan Books, in: Foreign Direct Investment, chapter 10, pages 160-176, Palgrave Macmillan.
    5. Sanghamitra Das & Mark J. Roberts & James R. Tybout, 2007. "Market Entry Costs, Producer Heterogeneity, and Export Dynamics," Econometrica, Econometric Society, vol. 75(3), pages 837-873, May.
    6. Susan E. Feinberg & Anil K. Gupta, 2004. "Knowledge spillovers and the assignment of R&D responsibilities to foreign subsidiaries," Strategic Management Journal, Wiley Blackwell, vol. 25(8‐9), pages 823-845, August.
    7. Stephen J. Kobrin, 1991. "An empirical analysis of the determinants of global integration," Strategic Management Journal, Wiley Blackwell, vol. 12(S1), pages 17-31, June.
    8. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    9. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, May.
    10. Susan E. Feinberg & Michael P. Keane, 2001. "U.S.-Canada Trade Liberalization And Mnc Production Location," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 118-132, February.
    11. Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-564, September.
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    Cited by:

    1. Ndonga Dennis, 2013. "Increasing Africa’s Share of Vertical Investments through Single Window Systems," The Law and Development Review, De Gruyter, vol. 6(2), pages 181-215, August.

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    More about this item

    Keywords

    Foreign direct investment; Intra-firm Trade; International trade; Development; Technology Spillovers;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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