The extent of multinational activity and the share of world trade accounted for by multinational enterprises has risen steadily over the past two decades. This has led to renewed interest within Europe in the impact of multinational enterprises on employment, investment and trade, and the...

This paper constructs a theoretical model of foreign direct investment and examines the extent to which the model can explain the level of outward direct investment by U.S. companies over the last two decades. The authors find that market size and factor costs, both labor and capital, are...