Multinational Firms In The World Economy: Multinational Firms In The Wor by Giorgio Barba NavarettiMultinational Firms In The World Economy: Multinational Firms In The Wor by Giorgio Barba Navaretti

Multinational Firms In The World Economy: Multinational Firms In The Wor

byGiorgio Barba Navaretti

Paperback | August 20, 2006

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Depending on one's point of view, multinational enterprises are either the heroes or the villains of the globalized economy. Governments compete fiercely for foreign direct investment by such companies, but complain when firms go global and move their activities elsewhere. Multinationals are seen by some as threats to national identities and wealth and are accused of riding roughshod over national laws and of exploiting cheap labor. However, the debate on these companies and foreign direct investment is rarely grounded on sound economic arguments.

This book brings clarity to the debate. With the contribution of other leading experts, Giorgio Barba Navaretti and Anthony Venables assess the determinants of multinationals' actions, investigating why their activity has expanded so rapidly, and why some countries have seen more such activity than others. They analyze their effects on countries that are recipients of inward investments, and on those countries that see multinational firms moving jobs abroad. The arguments are made using modern advances in economic analysis, a case study, and by drawing on the extensive empirical literature that assesses the determinants and consequences of activity by multinationals. The treatment is rigorous, yet accessible to all readers with a background in economics, whether students or professionals. Drawing out policy implications, the authors conclude that multinational enterprises are generally a force for the promotion of prosperity in the world economy.

Giorgio Barba Navaretti is Professor of International Economics at the University of Milan and Scientific Director of the Centro Studi Luca d'Agliano. He has coauthored and coedited a number of books, most recently Labour Markets, Poverty, and Development (Oxford University Press, 1999). Anthony J. Venables is Chief Economist, Depart...
Title:Multinational Firms In The World Economy: Multinational Firms In The WorFormat:PaperbackDimensions:352 pagesPublished:August 20, 2006Publisher:Princeton University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0691128030

ISBN - 13:9780691128030


Table of Contents

Preface ix

List of Contributors xi

CHAPTER 1: Facts and Issues 1

1.1 Multinationals: What Are They and How Are They Measured? 2

1.2 The Facts: Empirical Overview 3

1.3 The Issues 15

1.4 Guide to the Book 20

Statistical Appendix 20

CHAPTER 2: The Multinational Enterprise: an Overview of Theory and Empirical Findings 23

2.1 National and International Production 24

2.2 Internalization and the Boundary of the Firm 35

2.3 Effects of FDI 39

2.4 Conclusions 47

CHAPTER 3: Horizontal Foreign Direct Investment: Product Market Access 49

3.1 A Model 49

3.2 National versus Multinational Supply 55

3.3 Demand and Firm Behaviour 64

3.4 The Effect of FDI on the Host Economy 66

3.5 Extensions 74

3.6 Conclusions 77

Appendix 3.1. Parameters Underlying Figures 78

Appendix 3.2. Section 3.5.1 78

CHAPTER 4: Vertical Foreign Direct Investment: Input Costs and Factor Prices 79

4.1 Cost-Minimizing Locations 80

4.2 Fragmentation and Factor Prices 84

4.3 Fragmentation in General Equilibrium 89

4.4 Factor Price Convergence? 92

4.5 Conclusions 96

Appendix 4.1. Parameter Values in Figures 4.1 and 4.2 97

Appendix 4.2. Parameter Values in Figure 4.6 97

Appendix 4.3. Components Labour Intensive 97

CHAPTER 5: Multinationals: the Firm and the Market 99

5.1 An Analytical Framework 100

5.2 Hold-up 102

5.3 Hold-up in Industry Equilibrium 109

5.4 Dissipation of Intangible Assets 114

5.5 Agency Costs 120

5.6 Conclusions 124

Appendix 126

CHAPTER 6: Determinants of FDI: the Evidence 127

6.1 A General Framework 127

6.2 Industry and Firm Determinants of FDI 131

6.3 Country Determinants of FDI 134

6.4 The Relative Importance of Horizontal versus Vertical FDI 141

6.5 Other Factors Affecting the Location of FDI 144

6.6 Concluding Remarks 150

CHAPTER 7: Host Country Effects: Conceptual Framework and the Evidence 151

7.1 Aggregate Effects of FDI on Economic Growth: Cross-Country Evidence 152

7.2 Firm Effects: Conceptual Framework 153

7.3 Productivity 155

7.4 Factor Markets 162

7.5 Employment Volatility 166

7.6 Multinationals and Local Firms 172

7.7 Conclusions 182

Appendix 183

CHAPTER 8: FDI and the Host Economy: a Case Study of Ireland 187

8.1 Ireland's Success in Attracting FDI 188

8.2 Characteristics of FDI Inflows to Ireland 200

8.3 FDI and the Development of the Irish Economy 207

8.4 Concluding Comments 214

CHAPTER 9: Home Country Effects of Foreign Direct Investment 217

9.1 What are the Effects? Setting the Issues 218

9.2 Foreign Production and Domestic Activities: Substitutes or Complements? 220

9.3 Skill Intensity 227

9.4 Technological Sourcing 230

9.5 Effects on Productivity: Comparing MNEs and National Firms 231

9.6 Conclusions 238

Appendix. Derivation of Empirically Testable Demands for Relatively Skilled Labour 239

CHAPTER 10: Policy Implications and Effects 241

10.1 The Impact of FDI on Economic Policy 242

10.2 FDI Incentives 251

10.3 Policy Competition and Policy Coordination 263

10.4 International Governance of Investment Regimes 268

10.5 Concluding Remarks 275

CHAPTER 11: Conclusions 277

Appendix A Statistical Definitions and Databases on Foreign Direct Investment and the Activities of Multinationals 283

A.1 International Statistics on Foreign Direct Investment 283

A.2 Financial and Operating Data on Multinational Firms 288

Glossary 299

References 303

Index 323

Editorial Reviews

"This book presents a comprehensive analysis of the economics of multinational enterprises. It thoroughly assesses what they are, why they exist, and what their economic impact on home and host countries is. It is a well-rounded analysis. Representing a rare attempt to bring together several important strands in the literature on the economics of multinationals, combining theory and rigorous econometric work, it will be of wide interest not only to researchers of these issues but also to students, policy makers, and interested general readers."-Holger Görg, University of Nottingham