Chapter

Determinants and Effects of Multinational Growth

Birgitta Swedenborg

in Topics in Empirical International Economics

Published by University of Chicago Press

Published in print April 2001 | ISBN: 9780226060835
Published online February 2013 | e-ISBN: 9780226060859 | DOI: http://dx.doi.org/10.7208/chicago/9780226060859.003.0005
Determinants and Effects of Multinational Growth

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The enormous growth of international direct investment and multinational corporations (MNCs) in the postwar period has raised challenging issues for international trade theory and practical policy alike. This chapter analyzes the determinants and effects of foreign investment by Sweden to explore how foreign production influences home-country exports and, indirectly, the pattern of employment. It first describes the importance of Swedish MNCs in the Swedish economy before looking at the determinants of foreign production by Swedish manufacturing firms and the effects on parent-company exports over the period from 1965 to 1994. It also discusses the effects on the firm's overall competitiveness and implications for changes in the pattern of specialization in the home country. What are the implications of MNC growth for Sweden? The most important effect comes from the impact of larger firm size on the ability of MNCs to invest more in research and development, in specialized headquarter services, and in a more widespread distribution network abroad — all of which benefit the Swedish part of the MNCs.

Keywords: Sweden; multinational corporations; foreign investment; foreign production; exports; employment; economy; manufacturing; firm size; research and development

Chapter.  16314 words.  Illustrated.

Subjects: International Economics

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