Domestic versus International Capital Mobility: Some Empirical Evidence

James D. Reitzes and Donald Rousslang

Canadian Journal of Economics, 1988, vol. 21, issue 2, 312-23

Abstract: This paper develops an empirical test to determine whether, on average, capital moves more easily between industries within a country or between coun tries within an industry. The test is applied using cross-section dat a on accounting rates of return to capital of U.S. multinational corp orations in 1966 and 1977. It is found that international capital mob ility was greater in the earlier period, but domestic capital mobilit y tended to dominate in the later period. These findings are of parti cular importance to the field of international economics, since compe ting trade models use opposite assumptions as regards which type of c apital mobility is greater.

Date: 1988
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