Knowledge-Capital, International Trade and Foreign Direct Investment: A Sectoral Analysis

Titus Awokuse, Keith Maskus and Yiting An ()
Additional contact information
Yiting An: Senior Economist, Ernst and Young Consulting

No 10-11, Working Papers from University of Delaware, Department of Economics

Abstract: The knowledge-capital (KC) model of MNEs is now a widely adopted empirical approach to explaining the location and production decisions of global firms based on both horizontal and vertical motivations. While most of the existing studies have focused on highly aggregated national data, we extend this model to sectoral data consisting of broad manufacturing industries and explicitly account for the dynamic nature of international investment data. The empirical results from a dynamic panel data analysis indicate that that the predictions of the KC model regarding MNE behavior vary by the type of industry. Production processes in electronics and transportation-equipment are more characterized by efficient vertical specialization of R&D activities and assembly, while other sectors display more complex motivations.

Keywords: FDI; knowledge-capital model; exports; GMM (search for similar items in EconPapers)
JEL-codes: F14 F23 L23 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2010
New Economics Papers: this item is included in nep-cse, nep-int and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: KNOWLEDGE CAPITAL, INTERNATIONAL TRADE, AND FOREIGN DIRECT INVESTMENT: A SECTORAL ANALYSIS (2012)
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