Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis

Salvador Barrios (), Holger Görg and Eric Strobl ()

Open Economies Review, 2003, vol. 14, issue 4, 397-418

Abstract: According to the 'convergence hypothesis' multinational companies will tend to displace national firms and trade as total market size increases and as countries converge in relative size, factor endowments, and production costs. Using a recent model developed by Markusen and Venables (1998) as a theoretical framework, we explicitly develop, and address the properties of, empirical measures to proxy displacement of national firms by multinationals. These measures are then used to test the convergence hypothesis for a panel of data of country pairs over the years 1985–1996. Our results based on aggregate country level data provide some empirical support for the convergence hypothesis. Copyright Kluwer Academic Publishers 2003

Keywords: multinational enterprises; convergence hypothesis; new trade theory (search for similar items in EconPapers)
Date: 2003
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Working Paper: Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis (2001)
Working Paper: Multinational Enterprises and New Trade Theory: Evidence for the Convergence Hypothesis
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DOI: 10.1023/A:1025364827266

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