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Proximity-Concentration versus Factor Proportion Explanation: The Case of Swedish Multinationals in the EU

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  • Mathä, Thomas

    (Dept. of Economics, Stockholm School of Economics)

Abstract

Both proximity-concentration trade-off and factor proportions explanations have been forwarded to explain the existence of multinational enterprises. This paper analyses to what extent these different explanations are supported empirically, in making a first attempt to distinguish explicitly between horizontally and vertically integrated multinationals. The affiliate production share of horizontally integrated multinationals is mainly explained by low plant-level economies of scale, large host country size and similarities in relative factor endowments. Differences for vertical multinationals appear with regard to firm- and plant-level economies of scale, country size, trade costs and relative factor endowments at the national and sectoral level.

Suggested Citation

  • Mathä, Thomas, 2000. "Proximity-Concentration versus Factor Proportion Explanation: The Case of Swedish Multinationals in the EU," SSE/EFI Working Paper Series in Economics and Finance 416, Stockholm School of Economics, revised 08 Dec 2000.
    • Handle: RePEc:hhs:hastef:0416
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    References listed on IDEAS

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    4. Karolina Ekholm,, "undated". "Factor Endowments and the Pattern of Affiliate Production by Multinational Enterprises," Discussion Papers 97/19, University of Nottingham, CREDIT.
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    Cited by:

    1. Dalila NICET-CHENAF & Eric ROUGIER, 2007. "Foreign Direct Investment: a comparative study of the attraction of Moroccan and Tunisian economies (In French)," Cahiers du GREThA (2007-2019) 2007-02, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).

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    More about this item

    Keywords

    Trade Costs; Country Size; Factor Endowments; Horizontal & Vertical Multinationals;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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