Domestic, vertical, and horizontal multinationals : a general equilibrium approach using the "knowledge capital model"


Autoria(s): Oyamada, Kazuhiko; Uchida, Yoko
Data(s)

28/09/2011

28/09/2011

01/03/2011

Resumo

One of the key factors behind the growth in global trade in recent decades is an increase in intermediate input as a result of the development of vertical production networks (Feensta, 1998). It is widely recognized that the formation of production networks is due to the expansion of multinational enterprises' (MNEs) activities. MNEs have been differentiated into two types according to their production structure: horizontal and vertical foreign direct investment (FDI). In this paper, we extend the model presented by Zhang and Markusen (1999) to include horizontal and vertical FDI in a model with traded intermediates, using numerical general equilibrium analysis. The simulation results show that horizontal MNEs are more likely to exist when countries are similar in size and in relative factor endowments. Vertical MNEs are more likely to exist when countries differ in relative factor endowments, and trade costs are positive. From the results of the simulation, lower trade costs of final goods and differences in factor intensity are conditions for attracting vertical MNEs.

Identificador

IDE Discussion Paper. No. 290. 2011.3

http://hdl.handle.net/2344/1074

IDE Discussion Paper

290

Idioma(s)

en

eng

Publicador

Institute of Developing Economies, JETRO

日本貿易振興機構アジア経済研究所

Palavras-Chave #Developing countries #Developed countries #Foreign investments #International business enterprises #Foreign Direct Investment #Knowledge-Capital Model #338.92 #C Developing countries 発展途上国 #D Developed countries 先進国 #F21 - International Investment; Long-Term Capital Movements #F23 - Multinational Firms; International Business
Tipo

Working Paper

Technical Report