We provide firm-level evidence concerning four key facts of services trade in Germany. First, not only firms classified as service firms, but also firms from all industries export and import services. Second, service trade patterns are fairly similar to those in goods trade. Most notably,...

Trade in intermediate goods as one possible link between rising trade and foreign direct investment is examined. To explain growing intermediate goods trade, three hypotheses are brought forward: outsourcing, global sourcing and the increasing importance of MNE networks. These hypotheses are...

Whereas many empirical studies show that the internationalization of production is driven by falling distance costs, theoretical models of the endogenous emergence of multinational enterprises predict the opposite. This paper argues that this dichotomy can be resolved if the production process...

This paper brings forward a three-country model to analyze the internationalization process in the age of globalization. It is shown that investment of one company increases not only the incentive to invest in another country for every national competitor but for third country's companies as...

We derive gravity equations from three different general equilibrium models incorporating multinational firms. We show that gravity equations are particularly adapted to the analysis of foreign affiliates' activities of multinational firms. However, the different theoretical models lead to...