Multinational networks and trade participation

Paola Conconi, Fabrizio Leone (), Glenn Magerman () and Catherine Thomas ()
Additional contact information
Fabrizio Leone: Université Libre de Bruxelles (ECARES) and CESifo
Catherine Thomas: London School of Economics, CEP, CESifo and CEPR

No 456, Working Paper Research from National Bank of Belgium

Abstract: This paper provides a novel explanation for the dominant role of multinational corporations (MNCs) in international trade: after being acquired by an MNC, firms face lower trade frictions in and around the network of countries in which their parent has a presence. We provide a model of firms’ export and import choices that isolates “MNC network effects” from other channels through which multinational ownership can affect trade participation. We bring the model to the data by combining rich information on the universe of Belgian firms and on MNCs’ global networks. We find that acquired firms are more likely to start trading with countries that belong to—or that are exogenously added to—their parental network. Network effects extend beyond MNC boundaries and dominate traditional firm-level channels in explaining affiliates’ entry in new markets. Our analysis suggests that the growth rate of acquired firms is more than twice as large as that of the median domestic firm due to MNC network effects

Keywords: Multinational Firms; International Business; Firm Behavior: Empirical Analysis (search for similar items in EconPapers)
JEL-codes: D22 F23 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2024-09
New Economics Papers: this item is included in nep-bec, nep-int and nep-net
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Multinational networks and trade participation (2025)
Working Paper: Multinational Networks and Trade Participation (2025)
Working Paper: Multinational Networks and Trade Participation (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:202409-456

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