Working Paper: NBER ID: w14072
Authors: Stephen Yeaple
Abstract: We use firm-level data for U.S. multinational enterprises (MNE) and the model of firm heterogeneity first presented in Helpman, Melitz, and Yeaple (2004) to make four empirical contributions. First, we show that the most productive U.S. firms invest in a larger number of foreign countries and sell more in each country in which they operate. Second, we assess the importance of firm heterogeneity in the structure of MNE activity. Third, we use the model to identify the mechanisms through which country characteristics affect the structure of MNE activity. Finally, we provide a systematic assessment of the model's shortcomings in order to inform the development of new theory.
Keywords: firm heterogeneity; multinational enterprises; international trade
JEL Codes: F1; F23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firm heterogeneity (D21) | Structure of multinational activity (F23) |
| Country characteristics (O57) | Scale of operations in MNE activity (F23) |
| Country characteristics (O57) | Relative size of fixed costs to marginal cost benefits (D21) |
| GDP increase (O49) | Number of US firms entering a country (F23) |
| Firm productivity (D21) | Investment decisions in multinational contexts (F23) |
| Country GDP per capita (O57) | Number of US firms entering the country (F23) |
| Country GDP per capita (O57) | Average productivity of entrants (D29) |