Vertical Multinationals and Host-Country Characteristics / Kevin H. Zhang, James R. Markusen.

Format:

Book

Author/Creator:

Zhang, Kevin H.

Contributor:

National Bureau of Economic Research.

Markusen, James R.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6203.

NBER working paper series no. w6203

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Summary:

The literature on multinationals and developing countries has examined the causality" running from direct investment to changes in country characteristics (wages skills, etc.) and also the opposite direction of causality, from existing country characteristics to" inward direct investment. This paper contributes to the second line of research the question of what country characteristics, particularly market size and labor-force" composition, attract inward investment. This approach is motivated by the empirical" observation that the poorest countries attract a far smaller share of world direct investment than" their share of income. Small markets receive less investment per capita than larger ones. We" develop a model that generates both stylized facts in equilibrium, suggesting the existence of a" development trap for small, skilled-labor-scarce countries.

Notes:

Print version record

September 1997.