Abstract

http://ssrn.com/abstract=1524857
 
 

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The Global Agglomeration of Multinational Firms


Laura Alfaro


Harvard University - Business, Government and the International Economy Unit

Maggie Xiaoyang Chen


George Washington University

October 22, 2012

Harvard Business School BGIE Unit Working Paper No. 10-043

Abstract:     
The explosion of multinational activities in recent decades is rapidly transforming the global landscape of industrial production. But are the emerging clusters of multinational production the rule or the exception? What drives the offshore agglomeration of multinational firms? Using a unique worldwide plant-level dataset that reports detailed location, ownership, and operation information for plants in over 100 countries, we construct a spatially continuous index of agglomeration and investigate the patterns and determinants underlying the global economic geography of multinational firms. Our analysis shows that the emerging offshore clusters of multinationals are not a simple reflection of domestic industrial clusters. Location fundamentals including market access and comparative advantage and under-emphasized agglomeration economies including capital-good market externality and technology diffusion play a particularly important role in multinationals’ offshore agglomeration.

Number of Pages in PDF File: 43

Keywords: multinational firm, agglomeration, location fundamentals, agglomeration economies

JEL Classification: F2, D2, R1

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Date posted: December 18, 2009 ; Last revised: November 28, 2012

Suggested Citation

Alfaro, Laura and Chen, Maggie Xiaoyang, The Global Agglomeration of Multinational Firms (October 22, 2012). Harvard Business School BGIE Unit Working Paper No. 10-043. Available at SSRN: http://ssrn.com/abstract=1524857 or http://dx.doi.org/10.2139/ssrn.1524857

Contact Information

Laura Alfaro (Contact Author)
Harvard University - Business, Government and the International Economy Unit ( email )
Cambridge, MA 02138
United States
Maggie Xiaoyang Chen
George Washington University ( email )
710 21st Street NW
Washington, DC 20052
United States
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