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The multinational firm and international trade policy

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  • Hillman, Arye L.
  • Ursprung, Heinrich W.

Abstract

This paper examines the relation between the multinational firm and the determination of international trade policy. At issue is whether the multinational firm exerts a protectionist or liberalizing influence on countries' national trade policies. Vertical integration appears quite unambivalently to give the multinational firm reason to favor liberal international trade policies. Horizontally integrated multinational enterprises, on the other hand, are inherently more protectionist than national firms since they own local import-competing production facilities at home and abroad, and hence have an interest in protection in both markets. Such protectionist presumption notwithstanding, we nevertheless demonstrate that via the process of political competition the horizontally integrated multinational enterprise has a liberalizing influence on the determination of countries' international trade policies.

Suggested Citation

  • Hillman, Arye L. & Ursprung, Heinrich W., 1989. "The multinational firm and international trade policy," Discussion Papers, Series II 88, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:88
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    References listed on IDEAS

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    1. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    2. Elhanan Helpman, 1985. "Multinational Corporations and Trade Structure," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 443-457.
    3. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 451-471, June.
    4. Grossman, Gene M., 1984. "The gains from international factor movements," Journal of International Economics, Elsevier, vol. 17(1-2), pages 73-83, August.
    5. Hillman, Arye L & Ursprung, Heinrich W, 1988. "Domestic Politics, Foreign Interests, and International Trade Policy," American Economic Review, American Economic Association, vol. 78(4), pages 719-745, September.
    6. Wilfred J. Ethier, 1986. "The Multinational Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 805-833.
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    1. Schuknecht, Ludger & Ursprung, Heinrich W., 1990. "Die Anti-Dumping-Politik der EG und der USA: Ein Vergleich aus der Sicht der neuen politischen Ökonomie," Discussion Papers, Series II 98, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".

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