Vertical Production Networks in Multinational Firms / Gordon H. Hanson, Raymond J. Mataloni, Matthew J. Slaughter.

Format:

Book

Author/Creator:

Hanson, Gordon H.

Contributor:

National Bureau of Economic Research.

Mataloni, Raymond J.

Slaughter, Matthew J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9723.

NBER working paper series no. w9723

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2003.

Summary:

In recent decades, growth of overall world trade has been driven in large part by the rapid growth of trade in intermediate inputs. Much of this input trade involves multinational firms locating input processing in their foreign affiliates, thereby creating global vertical production networks. In this paper, we use firm-level data on U.S. multinationals to examine trade in intermediate inputs for further processing between parent firms and their foreign affiliates. We estimate affiliate demand for imported inputs as a function of host-country and industry trade costs, factor prices, and other variables. Among our main findings are that demand for imported inputs is higher when affiliates face lower trade costs, lower wages for less-skilled labor (both in absolute terms and relative to wages for more-skilled labor), and lower corporate income taxes. These results contrast with many findings in previous research.

Notes:

Print version record

May 2003.