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Measuring the Intensity of Vertically Integrated Multinational Enterprises
Author(s) -
Tang Linghui
Publication year - 2002
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00168
Subject(s) - multinational corporation , foreign direct investment , intensity (physics) , business , manufacturing , investment (military) , labor intensity , labor cost , economics , international trade , international economics , market economy , marketing , engineering , macroeconomics , mechanical engineering , physics , finance , quantum mechanics , politics , political science , law
Using data collected by the Bureau of Economic Analysis (BEA), this study attempts to measure the intensity of vertically integrated multinational enterprises (VMNEs) for US foreign direct investment (FDI). By comparing the primary industry of US parents and their foreign affiliates, it is found that a significant proportion of VMNEs exists for US FDI abroad, which range over 14 manufacturing and three nonmanufacturing industries. The intensity of VMNEs is found to be negatively related with the host countries’ labor cost. Meanwhile, a critical amount of VMNEs arise to take advantage of proximity to customers through FDI.