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What Role for Multinationals in the New Theories of International Trade and Location?

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  • Grazia Ietto-Gillies

Abstract

The paper starts with a summary of the way the new theories of international trade have incorporated the role of multinational companies (MNCs) in the location of production. The main, specific assumptions used to incorporate MNCs' activities relate to joint inputs at the company's level combined with assumptions regarding costs at the plant level and spatial transaction costs. It is claimed that this approach explains multi-plant location, although it cannot discriminate between inter-regional and the inter-national multi-plant location. It is argued that nation-states should be distinguished by their regulatory regimes. The MNCs' ability to plan and organize across different regulatory regimes may give them special advantages linked to distributional issues and spread-ofactivities strategies. These strategies may lead to a pattern of industrial location not fully congruent with the one emerging from the new trade and location theories.

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  • Grazia Ietto-Gillies, 2000. "What Role for Multinationals in the New Theories of International Trade and Location?," International Review of Applied Economics, Taylor & Francis Journals, vol. 14(4), pages 413-426.
    • Handle: RePEc:taf:irapec:v:14:y:2000:i:4:p:413-426
    DOI: 10.1080/02692170050150101
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    References listed on IDEAS

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    6. John H. Dunning, 1977. "Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach," Palgrave Macmillan Books, in: Bertil Ohlin & Per-Ove Hesselborn & Per Magnus Wijkman (ed.), The International Allocation of Economic Activity, chapter 12, pages 395-418, Palgrave Macmillan.
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    1. Grazia Ietto-Gillies, 2012. "The Multinational Firm: Characteristics, Activities and Explanations in Historical Context," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 14, Edward Elgar Publishing.
    2. Jonathan Michie & Christine Oughton & Mario Pianta, 2002. "Innovation and the Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(3), pages 253-264.

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