Thomas Mathä: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden
Abstract: Both proximity-concentration trade-off and factor proportions explanations have been forwarded to explain the existence of multinational enterprises. This paper analyses to what extent these different explanations are supported empirically, in making a first attempt to distinguish explicitly between horizontally and vertically integrated multinationals. The affiliate production share of horizontally integrated multinationals is mainly explained by low plant-level economies of scale, large host country size and similarities in relative factor endowments. Differences for vertical multinationals appear with regard to firm- and plant-level economies of scale, country size, trade costs and relative factor endowments at the national and sectoral level.
19 pages, First version: November 15, 2000. Revised: December 8, 2000.
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