The Geography of Multinational Firms
Pontus Braunerhjelm and Karolina Ekholm Over recent decades, foreign direct investment (FDI) has become a major force in the global economy. The geographical pattern of capital formation, trade and technological spillovers across countries and regions, ar
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Economics of Science, Technology and Innovation V O L U M E 12
Series Editors Cristiano Antonelli, University of Torino, Italy Bo Carlsson, Case Western Reserve University, U.S.A.
Editorial Board: Steven Klepper, Carnegie Mellon University, U.S.A. Richard Langlois, University of Connecticut, U.S.A. J.S. Metcalfe, University of Manchester, U.K. David Mowery, University of California, Berkeley, U.S.A. Pascal Petit, CEPREMAP, France Luc Soete, Maastricht University, The Netherlands
The titles published in this series are listed at the end of this volume.
THE GEOGRAPHY OF MULTINATIONAL FIRMS
edited by PONTUS BRAUNERHJELM and KAROLINA EKHOLM The Research Institute of Industrial Economics (IUI) Stockholm, Sweden
SPRINGER SCIENCE+BUSINESS MEDIA, L L C
Library of Congress Cataloging-in-Publication Data Braunerhjelm, Pontus. The geography of multinational firms / edited by Pontus Braunerhjelm and Karolina Ekholm. p. cm. — (Economics of science, technology, and innovation ; v. 12) Includes bibliographical references and index. ISBN 978-1-4613-7598-2 ISBN 978-1-4615-5675-6 (eBook) DOI 10.1007/978-1-4615-5675-6 1. International business enterprises—Location—Decision making. 2. Business relocation—Decision making. 3. Corporations, SwedishLocation. I. Ekholm, Karolina. II. Title. III. Series. HD62.4.B735 1998 338.8'8-dc21 98-11399 CIP
Copyright ® 1998 by Springer Science+Business Media New York Originally published by Kluwer Academic Publishers in 1998 Softcover reprint of the hardcover 1st edition 1998 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, mechanical, photo-copying, recording, or otherwise, without the prior written permission of the publisher, Springer Science+Business Media, L L C . Printed on acid-free paper
Contents Preface and Acknowledgment
ix
List of Contributors
xi
1 Introduction
1
Pontus Braunerhjelm and Karolina Ekholm 1.1 Outline of the Book . . . . 1.2 Summary of Main Findings 1.3 References..........
3 7 8
2 Multinational Enterprises, and the Theories of Trade and Location 9 James R. Markusen 2.1 Introduction............ 2.2 Background............ 2.3 A Knowledge-Capital Approach . 2.4 A Model with Endogenous Multinationals 2.5 Production Regimes and the Direction of Trade 2.6 • Investment Liberalization, the Volume and Direction of Trade 2.7 Investment Liberalization, Factor Prices, and Income Distribution . . . 2.8 Summary . 2.9 References. 3 Geographical Specialization of US and Swedish FDI Activity Pont us Braunerhjelm and Robert E. Lipsey 3.1 3.2 3.3 3.4 3.5 3.A
Introduction . . . . . . . . . . . . . . Determinants of FDI . . . . . . . . . The Pattern of Swedish and US FDI Conclusion References. Appendix .
9 11 12 15 19 24 27 30 31 33 33 34 36 49 50 53
vi
4 Proximity Advantages, Scale Economies, and the Location of Production 59
Karolina Ekholm 4.1 4.2
5
Introduction........................... Evidence on the Country Pattern of Trade and Foreign Production . . . . . . . . . . . .
