Estimating the Knowledge-Capital Model of the Multinational Enterprise

David L. Carr, James Markusen and Keith Maskus

No 6773, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: What we term the firm includes three principal assumptions. First, services of knowledge-based and knowledge-generating activities, such as R&D, can be geographically separated from production and supplied to production facilities at low cost. Second, these knowledge-intensive activities are skilled-labor intensive relative to production. These characteristics give rise to vertical multinationals, which fragment production and locate activities according to factor prices and market size. Third, knowledge-based services have a (partial) joint-input characteristic that they can be supplied to additional production facilities at low cost. This characteristic gives rise to horizontal multinationals, which produce the same goods or services in multiple locations. In this paper, we note how this model predicts relationships between affiliate sales and country characteristics. We then subject these predictions to empirical tests.

JEL-codes: F12 F23 (search for similar items in EconPapers)
Date: 1998-10
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Published as Carr, David L., James R. Markusen and Keith E. Maskus. "Estimating The Knowledge-Capital Model Of The Multinational Enterprise," American Economic Review, 2001, v91(3,Jun), 693-708.

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Journal Article: Estimating the Knowledge-Capital Model of the Multinational Enterprise (2001)
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