Human Capital, Country Size, and North-South Manufacturing Multinational Enterprises

Kevin Honglin Zhang ()
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Kevin Honglin Zhang: Illinois State University, Department of Economics, Postal: 100 N University St # 142 Normal IL 61761-4402 USA ,, http://www.cob.ilstu.edu/

Economia Internazionale / International Economics, 2000, vol. 53, issue 2, 237-260

Abstract: A model of North-South multinational enterprises (MNEs) is constructed in which both horizontal and vertical MNEs anse endogenously. While honizontal MNEs are more active when host countries become more similar in national income and human capital, vertical MNEs are encouraged by cheap unskilled labor and growing national income in host countries. The unified treatment of the two types of MNEs predicts a negative link of MNEs to cross-country differences in factor proportions and a positive link between MNEs and host country’s size. This result is consistent with empirical evidence that activities of MNEs in a developing country are positively related to the country’s level of economic development.

Keywords: Vertical and Horizontal Multinationals; Human Capital; Country Size (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 2000
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