Advances in Logistics and the Growth of Intra-Firm Trade: The Case of Canadian Affiliates of U.S. Multinationals, 1984-1995

62 Pages Posted: 12 Dec 2007

See all articles by Michael P. Keane

Michael P. Keane

University of New South Wales

Susan E. Feinberg

Rutgers, The State University of New Jersey - Rutgers University, Camden

Abstract

Intra-firm trade in intermediates between U.S. multinational parents (MNCs) and their Canadian manufacturing affiliates increased dramatically in the 1984-1995 period (i.e., it roughly doubled). Tariff and transport cost declines were far too small to explain this phenomenon. But we show that the advent of improved logistics management practices, including the just-in-time (JIT) production system, can explain much of the growth of intra-firm trade. JIT lowers the inventory carrying cost component of intra-firm trade, and, by 1984, this was more important than tariff and transport costs in many industries. We combine regression analysis with numerous case studies to draw our conclusions.

Suggested Citation

Keane, Michael P. and Feinberg, Susan E., Advances in Logistics and the Growth of Intra-Firm Trade: The Case of Canadian Affiliates of U.S. Multinationals, 1984-1995. The Journal of Industrial Economics, Vol. 55, Issue 4, pp. 571-632, December 2007, Available at SSRN: https://ssrn.com/abstract=1070294 or http://dx.doi.org/10.1111/j.1467-6451.2007.00323.x

Michael P. Keane (Contact Author)

University of New South Wales ( email )

Sydney, NSW
Australia

Susan E. Feinberg

Rutgers, The State University of New Jersey - Rutgers University, Camden

Camden, NJ 08102
United States

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