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On the differential behaviour of national and multinational firms: A within and across sectors approach

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  • Latorre, María C.
  • Gómez-Plana, Antonio G.

Abstract

This paper looks for different patterns of behaviour of national firms and multinationals (MNEs) using a computable general equilibrium model. The model is calibrated for the case of the Czech Republic, which has been a very attractive foreign direct investment location in the last three decades. We replicate the arrival of MNEs to different sectors of this country in turn and analyse the responses of both types of firms in the short run. The higher labour intensity of national firms leads them to different patterns of production and labour demand, compared to MNEs operating within the same sector. The demand side of the model, i.e., exports and private consumption, drives the evolution of production and labour demand across sectors. Regarding prices, the differential pattern between both types of firms seems weaker. Indeed, prices within and across sectors reflect a complex interplay between factor costs and intermediate costs. Our analysis offers detailed evidence on how the impact of MNEs will differ depending on the sector to which they arrive. Finally, the aggregate results suggest that a completely different microeconomic panorama may underlie rather similar macroeconomic outcomes.

Suggested Citation

  • Latorre, María C. & Gómez-Plana, Antonio G., 2011. "On the differential behaviour of national and multinational firms: A within and across sectors approach," Conference papers 332168, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332168
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    References listed on IDEAS

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