11. Multinationals anization of the Firm英文.pdf

Feenstra, Advanced International Trade
Chapter 11: Multinationals and Organization of the Firm
Despite the fact that this book is about international trade, we have so far not introduced
any role for traders. There has been little scope for firms, let alone economic organization more
generally, to have any significant influence on trade patterns between countries. This contradicts
the empirical fact that a good deal of trade occurs internally within firms located across
countries. For the ., for example, about one-third of exports and over 40% of imports consist
of intra-firm trade between a . or foreign firm and their affiliates – see Table . When a
firm operates in several countries it is a multinational enterprise, and the investment made in the
foreign country is referred to as foreign direct investment (FDI).1 The first goal of this chapter is
to introduce these features into our earlier trade models.
The classic treatment of a multinational is that it has some intangible asset (such as
knowledge of a production process) that it can use to its advantage in a foreign market. It must
decide whether to simply export there, or to invest in that market by building a plant and selling
the product, or whether to engage in a joint venture or other contractual arrangement with a
foreign firm to produce the good. We will initially focus on the first two decisions – whether to
export to the foreign market or to build a plant and sell there. The third case – whether to engage
in a joint venture with a foreign firm –will be discussed at the end of the chapter. Notice that this
classic statement of the problem can equally well work in reverse, whereby the acquisition of a
foreign firm can bring with it some knowledge of value to the purchaser, that could not be
obtained by simply buying the products of that foreign
1 We might define FDI as acquiring sufficient assets i