Estimating the Knowledge-Capital Model of the Multinational Enterprise

43 Pages Posted: 16 Nov 1998 Last revised: 11 Oct 2010

See all articles by David L. Carr

David L. Carr

University of South Dakota - School of Business

James R. Markusen

University of Colorado at Boulder - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Keith E. Maskus

University of Colorado at Boulder - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: October 1998

Abstract

What we term the firm includes three principal assumptions. First, services of knowledge-based and knowledge-generating activities, such as R&D, can be geographically separated from production and supplied to production facilities at low cost. Second, these knowledge-intensive activities are skilled-labor intensive relative to production. These characteristics give rise to vertical multinationals, which fragment production and locate activities according to factor prices and market size. Third, knowledge-based services have a (partial) joint-input characteristic that they can be supplied to additional production facilities at low cost. This characteristic gives rise to horizontal multinationals, which produce the same goods or services in multiple locations. In this paper, we note how this model predicts relationships between affiliate sales and country characteristics. We then subject these predictions to empirical tests.

Suggested Citation

Carr, David L. and Markusen, James R. and Maskus, Keith E., Estimating the Knowledge-Capital Model of the Multinational Enterprise (October 1998). NBER Working Paper No. w6773. Available at SSRN: https://ssrn.com/abstract=138584

David L. Carr (Contact Author)

University of South Dakota - School of Business ( email )

414 East Clark Street
Vermillion, SD 57069
United States

HOME PAGE: http://www.usd.edu/~dcarr

James R. Markusen

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-492-0748 (Phone)
303-492-8960 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Keith E. Maskus

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-492-7588 (Phone)
303-492-8960 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
64
Abstract Views
2,188
rank
343,598
PlumX Metrics