The literature on multinationals and developing countries has examined the causality" running from direct investment to changes in country characteristics (wages skills, etc.) and also the opposite direction of causality, from existing country characteristics to" inward direct investment. This...

Producer services such as managerial and engineering consulting can provide domestic firms with the substantial benefits of specialized knowledge that would be costly in terms of both time and money for domestic firms to develop on their own. These intermediate services are often non-traded, or...

Conventional analysis in the trade-industrial-organization literature suggests that, when a country has some market power over an imported good, some small level of protection must be welfare improving. This is essentially a terms-of-trade argument that is reinforced if the imported goods are...

Beginning in the early 1980s, theoretical analyses have incorporated the multinational firm into the microeconomic, general-equilibrium theory of international trade. Recent advances indicate how vertical and horizontal multinationals arise endogenously as determined by country characteristics,...

The first purpose of this paper is to specify certain microeconomic determinants of "external" economies and then analyze the consequences of these economies for production and welfare in a simple general-equilibrium model. The second purpose is to explore the circumstances under which the...

A model is developed in which the output of one traded sector (e.g., high tech) is produced using consultan ts who supply differentiated skilled services. An external economy is shown to exist, which in turn implies (1) the suboptimal supply of s killed specialists, (2) multiple equilibria, and...

Multinational Firms and the Theory of International Trade James R. Markusen Despite the great importance of multinational firms in international economics, theoretical and empirical research on these firms has generally been conducted separately from that on international trade. In this book,...

A major role for per-capita income in international trade, as opposed to simply country size, was persuasively advanced by many early economists including Linder (1961), Kuznets (1966), and Chenery and Syrquin (1975). Yet this crucial element of their story was abandon by most later trade...

The basic gains-from-trade theorem makes a stark comparison between completely free trade and complete autarky. This paper is motivated by recent evidence that trade has greatly expanded on the extensive margin (aka fragmentation, vertical specialization, offshoring) by adding newly traded goods...

This paper contributes to research endogenizing multinational firms in general-equilibrium trade models. We attempt to integrate separate contributions on horizontal multinationals which produce the same final product in multiple locations, with work on vertical multinationals, which...