Multinationals and trade: three essays refining the scale-versus-proximity trade-off

This thesis contributes to the theoretical literature on multinational corporations. Theory posits foreign direct investment as an alternative to trade in goods: exporting firms benefit from scale economies, whereas firms supplying foreign markets via FDI benefit from proximity to markets. Yet empirical evidence shows FDI and trade to be positively related. This thesis introduces trade in intermediate goods into a standard model, to create a framework in which FDI and trade can be complementary. The model developed fits with the observation that a third of trade takes place within firms. The second part introduces firm-level heterogeneity into the basic proximity-versus-scale framework. The model allows investigation of the patterns of trade and the investment allowing simultaneously for difference among firms within a since sector. This firm-level size heterogeneity is a critical element of reality since in fact most multinationals are very large firms and most large firms are multinationals

Publication infos:
Genève, Institut universitaire de hautes études internationales, 2006
Publication year:
Number of pages:
106 p.
PhD Director(s):
Directeur de thèse : Professeur Richard Baldwin
Call number:

 Record created 2011-06-03, last modified 2018-01-28

Rate this document:

Rate this document:
(Not yet reviewed)