Reconciling the Evidence on the Knowledge Capital Model

Henrik Braconier, Pehr-Johan Norbäck and Dieter Urban
Additional contact information
Henrik Braconier: National Institute of Economic Research, Postal: P.O. Box 3116, SE-103 62 Stockholm, Sweden

No 590, Working Paper Series from Research Institute of Industrial Economics

Abstract: The Knowledge Capital Model (KC-model), described in Markusen (2002), encompasses both market size (horizontal) as well as factor endowment (vertical) explanations to why multinational production occurs. Although the KC-model seems intuitively appealing, the empirical support has, so far, been weak and even confused. In this study, we find strong, robust and consistent support for the KC-model. In contrast to previous studies, our skill measures follow directly from the model. We also use an enlarged dataset, where the date coverage is significantly improved. Our results also give estimated surfaces remarkably similar to theoretical simulations of the KC-model. In addition, the results give important insights into why previous studies have yielded such diverse results.

Keywords: Multinational Enterprise; Knowledge Capital Model; Vertical FDI (search for similar items in EconPapers)
JEL-codes: F12 F23 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2003-01-31
New Economics Papers: this item is included in nep-ifn, nep-mfd and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Reconciling the Evidence on the Knowledge‐capital Model (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0590

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