Ebook: The Geography of Multinational Firms

Pontus Braunerhjelm and Karolina Ekholm Over recent decades, foreign direct investment (FDI) has become a major force in the global economy. The geographical pattern of capital formation, trade and technological spillovers across countries and regions, are to an in­ creasing extent determined by the strategies chosen by multinational firms (MNFs). Between 1982 and 1994, the rate of growth of the global FDI stock was more than twice that of gross fixed capital formation, the growth of sales by foreign affiliates of multinational firms well exceeded that of world exports, and, by 1994, the MNFs accounted for approximately 6 percent of world output (United Nations, 1997, pp. xv-xvi). The overall mechanisms behind this rapid internationalization in terms of multinational produc­ tion have been attributed to the dismantling of trade barriers and the deregulation of capital markets, together with the advances in information technology that have facilitated the coordination and monitoring of inter­ nationally dispersed production. This development carries two important implications: First, firms operate in markets characterized by much tougher competition than only a decade ago, and, second, countries and regions are involved in competition for production to a much larger extent than before. This book addresses questions related to the location and geographical dispersion of the activities by multinational firms, a topic which has be­ come of increasing concern to policy-makers.

---

The Geography of Multinational Firms addresses the implications of multinational production, and the forces that determine location. The analytical framework builds on recent developments in the theory of location and multinational production. In addition, more micro-oriented aspects of agglomeration are incorporated into the analysis. The issues addressed include the following: What determines the choice of entry mode and the choice between exports and affiliate production? How important are agglomeration forces in determining the location of affiliate production and R&D? What is the nature of intra-firm trade flows?
The main focus of this book is on empirical issues, although the hypotheses tested are solidly founded in theory. The analysis is based upon a unique data-set embracing approximately 90 percent of Swedish multinational firms in the period 1965 to 1994, with emphasis on developments in the period 1980 to 1994.

---

The Geography of Multinational Firms addresses the implications of multinational production, and the forces that determine location. The analytical framework builds on recent developments in the theory of location and multinational production. In addition, more micro-oriented aspects of agglomeration are incorporated into the analysis. The issues addressed include the following: What determines the choice of entry mode and the choice between exports and affiliate production? How important are agglomeration forces in determining the location of affiliate production and R&D? What is the nature of intra-firm trade flows?
The main focus of this book is on empirical issues, although the hypotheses tested are solidly founded in theory. The analysis is based upon a unique data-set embracing approximately 90 percent of Swedish multinational firms in the period 1965 to 1994, with emphasis on developments in the period 1980 to 1994.
Content:
Front Matter....Pages i-xi
Introduction....Pages 1-8
Multinational Enterprises and the Theories of Trade and Location....Pages 9-32
The Geographical Specialization of US and Swedish FDI Activity....Pages 33-58
Proximity Advantages, Scale Economies, and the Location of Production....Pages 59-76
Organization of the Firm, Foreign Production and Trade....Pages 77-97
Agglomeration in the Geographical Location of Swedish MNFs....Pages 99-115
Locating R&D Abroad: The Role of Adaptation and Knowledge-Seeking....Pages 117-134
Patterns of Foreign Direct Investment into Sweden....Pages 135-156
The Choice of Entry Mode in Foreign Direct Investment....Pages 157-170
Strategic Location of Production in Multinational Firms....Pages 171-194
Back Matter....Pages 195-227

---

The Geography of Multinational Firms addresses the implications of multinational production, and the forces that determine location. The analytical framework builds on recent developments in the theory of location and multinational production. In addition, more micro-oriented aspects of agglomeration are incorporated into the analysis. The issues addressed include the following: What determines the choice of entry mode and the choice between exports and affiliate production? How important are agglomeration forces in determining the location of affiliate production and R&D? What is the nature of intra-firm trade flows?
The main focus of this book is on empirical issues, although the hypotheses tested are solidly founded in theory. The analysis is based upon a unique data-set embracing approximately 90 percent of Swedish multinational firms in the period 1965 to 1994, with emphasis on developments in the period 1980 to 1994.
Content:
Front Matter....Pages i-xi
Introduction....Pages 1-8
Multinational Enterprises and the Theories of Trade and Location....Pages 9-32
The Geographical Specialization of US and Swedish FDI Activity....Pages 33-58
Proximity Advantages, Scale Economies, and the Location of Production....Pages 59-76
Organization of the Firm, Foreign Production and Trade....Pages 77-97
Agglomeration in the Geographical Location of Swedish MNFs....Pages 99-115
Locating R&D Abroad: The Role of Adaptation and Knowledge-Seeking....Pages 117-134
Patterns of Foreign Direct Investment into Sweden....Pages 135-156
The Choice of Entry Mode in Foreign Direct Investment....Pages 157-170
Strategic Location of Production in Multinational Firms....Pages 171-194
Back Matter....Pages 195-227
....