Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228185
Authors: 
Davies, Ronald B.
Markusen, James R.
Year of Publication: 
2020
Series/Report no.: 
Working Paper Series No. WP20/05
Abstract: 
The structure of a multinational firm, that is how its affiliates relate to one another, is critical for understanding where multinationals locate, how policy affects them, and their resilience to localized shocks. Here, we review the two main structures - market-seeking horizontal and cost-difference exploiting vertical investment - prevalent in the literature. In addition, we use data (primarily from the US) to examine which of these structures seems to dominate the data. This includes a novel use of measures of global value chain positioning of a country's industries. In each case, the data suggests a dominant role for horizontal investment. We conclude with a discussion of the challenge that intangibles play in multinational data and point towards potentially fertile areas for future research.
Subjects: 
Foreign Direct Investment
Multinational Corporations: Horizontal FDI
Vertical FDI
Global value chains
JEL: 
F23
F14
Document Type: 
Working Paper

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