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Trade, Foreign direct investment, and multinational enterprises in a general equilibrium model

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  • Koop, Michael J.

Abstract

Trade, foreign direct investment and the existence of multinational enterprises are often analyzed in separate model, which are frequently based on mutually exclusive assumptions. The paper integrates several features of international economic exchange into one general equilibrium model. This model explains various types of trade (interindustry, intraindustry, intrafirm), foreign direct investment (one-way, cross-hauling of FDI), and the existence of multinational enterprises (vertically as well as horizontally integrated ones). With the market structure being endogeneous, different production, trade and investment patterns can occur. In order to assess the influence of country asymmetries (relative and absolute factor endowment differences) and transport costs on production patterns as well as trade and investment flows, simulation techniques are applied to various specifications of the model.

Suggested Citation

  • Koop, Michael J., 1997. "Trade, Foreign direct investment, and multinational enterprises in a general equilibrium model," Kiel Working Papers 833, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:833
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    References listed on IDEAS

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    Cited by:

    1. Koop, Michael J., 2001. "Capital Income Taxation of Asymmetric Countries," Kiel Working Papers 1041, Kiel Institute for the World Economy (IfW Kiel).
    2. Springer, Katrin, 2000. "Do We Have to Consider International Capital Mobility in Trade Models?," Kiel Working Papers 964, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    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
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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