Trade Within Multinational Boundaries

Laura Alfaro, Paola Conconi, Fariha Kamal and Zachary Kroff

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We leverage newly linked data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis to study transactions within U.S. multinational enterprises (MNEs). We show that using administrative data on intrafirm trade allows us to correct for measurement error in survey data and to identify the positive relationship between input-output (IO) linkages and the probability of trade between U.S. parents and their foreign affiliates. We also document the prevalence of intrafirm trade: more than half (three-quarters) of affiliates worldwide (in North America) export to or import from their U.S. parent. Our findings provide strong empirical support for traditional theories of firm boundaries that predict trade between vertically linked units of the same firm, and underscore the importance of accounting for the trade frictions that shape MNEs’ regional supply chains.

JEL-codes: D23 F14 F23 F4 L20 (search for similar items in EconPapers)
Date: 2025-07
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https://www2.census.gov/library/working-papers/2025/adrm/ces/CES-WP-25-46.pdf First version, 2025 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:25-46

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