Multiproduct Multinationals and Reciprocal FDI Dumping

Richard Baldwin and Gianmarco Ottaviano

No 1851, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The global pattern of foreign direct investment (FDI) is quite similar to the world trade pattern. In particular, intra-industry FDI between rich nations is almost as pervasive as intra-industry trade among rich nations. In the ‘standard’ multinational corporation (MNC) model (of Markusen, Venables, Brainard, and others), FDI is driven by a trade-off between proximity and scale, so firms typically supply the foreign market via exports or via FDI. The close correlation of two-way trade and investment flows is therefore difficult to explain with the standard model. We propose a model of multiproduct MNCs where firms simultaneously engage in intra-industry FDI and intra-industry trade.

Keywords: Foreign Direct Investment; International Investment; International Trade; Multinational Corporations (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 1998-03
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Multiproduct multinationals and reciprocal FDI dumping (2001)
Working Paper: Multiproduct Multinationals and Reciprocal FDI Dumping (1998)
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