EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: This paper analyses the effects of the Single European Market and Swedish Investment liberalisation on the structure of Swedish multinationals with their EU affiliates. The empirical results suggest that the determinants associated with horizontal and vertical multinationals have become increasingly relevant between 1974 and 1994. Horizontal multinationals are increasingly deterred by large plant-level economies of scale, increasingly associated with large trade costs and relative factor endowment similarities, while vertical multinationals are increasingly associated with relative factor endowment differences. This suggests that integration has increased competitive pressures to increase efficiency in exploiting economies of scale, and specialisation according to comparative advantages.

Keywords: Single European Market; Swedish Investment; Liberalisation; Country Size; Factor Endowments; Horizontal & Vertical Multinationals

JEL-codes: F12; F21; F23

35 pages, May 1, 2002

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