Theory and empirics of Markusen type multinationals

Uchida Yoko and Kazuhiko Oyamada

No 516, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: Research on multinational firms’ activity has been conducted widely since late 1980s. The literature is differentiated into three types: horizontal FDI, vertical FDI, and three-country FDI, represented by export platform FDI. There are other methods of differentiation of the literature by approach, for example, the pure theory approach represented by Krugman and Melitz and the numerical simulation approach represented by Markusen. This paper surveys Markusen type literature by firm type. There is little literature focused on intermediate goods trade, although intermediate goods trade is considered to be strongly related to the production patterns of MNEs. In this paper, we introduce a model to explicitly treat intermediate goods trade and present simulation analysis for empirical estimation.

Keywords: Developing countries; Developed countries; Foreign investments; International business enterprises; Multinational firms; Foreign direct investment; Knowledge-capital model (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Date: 2015-03-01
New Economics Papers: this item is included in nep-int
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 516. 2015-03-01

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