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Market Globalization by Firms from Emerging Markets and Small Countries: an Application of the Neoclassical Trade Model


  • Tamir Agmon



The changes in globalization and in the world of international business make it necessary to rethink the basic model of the economics of international business. For most of the 2nd half of the 20th centuryinternational business was about how large companies in the developed countries increase their valuevia international business activities. Not surprisingly the research in the economics of international business from Caves, Kindleberger, and Hymer to Buckley and Casson, Dunning, and many others was based on models of industrial organization. The world has changed and international business has become a two-way street where firms and governments from emerging markets and small countries are as active as the developed countries MNEs and their governments. In this paper the basic international trade model is used to gain insights of the new world of international business. In particular, a dynamic model of changing factor intensity and of creating local specific competitive and comparative advantages for firms and governments from emerging markets is presented and discussed.

Suggested Citation

  • Tamir Agmon, 2009. "Market Globalization by Firms from Emerging Markets and Small Countries: an Application of the Neoclassical Trade Model," William Davidson Institute Working Papers Series wp963, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2009-963

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    Economics of international business; international trade models; emerging markets;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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