The Global Agglomeration of Multinational Firms

Laura Alfaro and Maggie Chen

No 10-043, Harvard Business School Working Papers from Harvard Business School

Abstract: The explosion of multinational activities in recent decades is rapidly transforming the global landscape of industrial production. But are the emerging clusters of multinational production the rule or the exception? What drives the offshore agglomeration of multinational firms in comparison to the agglomeration of domestic firms? Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of pairwise-industry agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. Our analysis presents new stylized facts that suggest the emerging offshore clusters of multinationals are not a simple reflection of domestic industrial clusters. Agglomeration economies including capital-good market externality and technology diffusion play a more important role in the offshore agglomeration of multinationals than the agglomeration of domestic firms. These findings remain robust when we address potential reverse causality by exploring the regional pattern and process of agglomeration.

Keywords: multinational firm; agglomeration; location fundamentals; agglomeration economies (search for similar items in EconPapers)
JEL-codes: D2 F2 R1 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2009-12, Revised 2014-04
New Economics Papers: this item is included in nep-cse and nep-net
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Citations: View citations in EconPapers (56)

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http://www.hbs.edu/faculty/pages/download.aspx?name=10-043.pdf (application/pdf)

Related works:
Journal Article: The global agglomeration of multinational firms (2014)
Working Paper: The Global Agglomeration of Multinational Firms (2014)
Working Paper: The Global Agglomeration of Multinational Firms (2010)
Working Paper: The Global Agglomeration of Multinational Firms (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:10-043

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