Introduction The size and structure of multinationals Foreign direct investment Explaining multinationals Multinationals in general equilibrium - PowerPoint PPT Presentation

Slide1 l.jpg
Download
1 / 29

International Trade & the World Economy;  Charles van Marrewijk CHAPTER 15; MULTINATIONALS Introduction The size and structure of multinationals Foreign direct investment Explaining multinationals Multinationals in general equilibrium Characterization of equilibrium

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.

Download Presentation

Introduction The size and structure of multinationals Foreign direct investment Explaining multinationals Multinationals in general equilibrium

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Slide1 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide3 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide4 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Introduction

Joseph Schumpeter (1883 - 1950)


Slide5 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide6 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide7 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide8 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide9 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide10 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide11 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

The size and structure of multinationals


Slide12 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide13 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Foreign direct investment


Slide14 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Foreign direct investment


Slide15 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Foreign direct investment


Slide16 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Foreign direct investment


Slide17 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide18 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Explaining multinationals

  • Dunning’s OLI framework:

  • Ownership advantages

  • Location advantages

  • Internalization advantages

  • Empirical characteristics of multinationals:

  • high ratios of R&D relative to sales

  • employ large numbers of scientific, technical, and other 'white collar' workers as a percentage of their work force

  • high value of 'intangible' assets

  • associated with new and/or technically complex products

  • negatively associated with plant-level scale economies

  • associated with product-differentiation variables (e.g. advertising/sales)

  • A minimum or 'threshold' level of firm size seems to be important

  • Multinationals tend to be older, more established firms.


Slide19 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide20 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Multinationals in general equilibrium

  • Markusen-Venables model

  • Perfect competition and CRS for food sector.

  • Imperfect competition and IRS for manufacturing sector

  • Production of manufactures characterized by

  • c - the (constant) marginal production costs in terms of labor

  • t - the amount of labor needed to transport one unit of manufactures from Austria to Bolivia, or vice versa.

  • F - the firm level fixed costs in terms of labor.

  • G - the plant level fixed costs in terms of labor.


Slide21 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Headquarters

in Austria

Firm level

fixed costs FwA

+

Plant level

fixed costs GwA

Multi-plant

production?

yes

no

Plant level

fixed costs GwB

Multinationals in general equilibrium

Headquarter location

Headquarters

in Bolivia

Firm level

fixed costs FwB

+

Plant level

fixed costs GwB

Multi-plant

production?

yes

Plant level

fixed costs GwA

no

nA; national firm, headquarters in Austria

MC in A = cwA

MC in B = (c+t)wB

mA; multinational firm, headquarters in Austria

MC in A = cwA

MC in B = cwB

mB; multinational firm, headquarters in Bolivia

MC in A = cwA

MC in B = cwB

nB; national firm, headquarters in Bolivia

MC in A = (c+t)wA

MC in B = cwB


Slide22 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide23 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Characterization of equilibrium


Slide24 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Characterization of equilibrium


Slide25 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide26 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Case study: hard disk drives


Slide27 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Case study: hard disk drives


Slide28 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

CHAPTER 15; MULTINATIONALS

Introduction

The size and structure of multinationals

Foreign direct investment

Explaining multinationals

Multinationals in general equilibrium

Characterization of equilibrium

Case study: hard disk drives

Conclusions


Slide29 l.jpg

International Trade & the World Economy;  Charles van Marrewijk

Conclusions

  • Multinationals are becoming increasingly important (w.r.t. production, investment, and trade)

  • Most multinationals in OECD countries

  • Most FDI horizontal acquisitions between OECD countries

  • Explaining multinationals

  • Descriptive OLI framework

  • Modern general equilibrium framework

  • Modern framework determines market structure endogenously; results confirm reasonably well with stylized facts (multinationals dominate if countries are more similar; national firms dominate if countries differ in size or relative endowment)


  • Login