Discriminating Among Alternative Theories of the Multinational Enterprise Journal Article uri icon



  • Recent theoretical developments have incorporated endogenous multinational firms into the general–equilibrium model of trade. One simple taxonomy separates the theory into “vertical” models, in which firms geographically separate activities by stages of production, and “horizontal” models, in which multiplant firms duplicate roughly the same activities in many countries. The authors nest a horizontal and a vertical model within a hybrid (unrestricted) “knowledge–capital model” and estimate the specifications with data on US foreign direct investment activity. In the nested econometric tests, the data sample cannot distinguish statistically between the unrestricted model and the restricted horizontal model, indicating that the latter captures virtually all of the determinants of FDI. The tests overwhelmingly reject the vertical model.

publication date

  • November 1, 2002

has restriction

  • green

Date in CU Experts

  • July 10, 2014 5:58 AM

Full Author List

  • Markusen JR; Maskus KE

author count

  • 2

Other Profiles

International Standard Serial Number (ISSN)

  • 0965-7576

Electronic International Standard Serial Number (EISSN)

  • 1467-9396

Additional Document Info

start page

  • 694

end page

  • 707


  • 10


  • 4