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On the Differential Behaviour of National and Multinational Firms: A Within‐ and Across‐sectors Approach[Note 5. A previous version of this paper has been sent ...]
Author(s) -
Latorre María C.
Publication year - 2013
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12100
Subject(s) - multinational corporation , differential (mechanical device) , economics , production (economics) , consumption (sociology) , investment (military) , final demand , foreign direct investment , replicate , economic geography , macroeconomics , finance , statistics , mathematics , social science , sociology , politics , political science , law , engineering , aerospace engineering
This paper looks for different patterns of behaviour of national firms and multinational enterprises ( MNE s). Its main contribution is the use of a computable general equilibrium perspective to analyse firms’ performance. The model is calibrated for the case of the C zech R epublic, which has been a very attractive foreign direct investment location in the last three decades. We replicate the arrival of MNE s to different sectors of this country in turn and analyse the responses of both types of firms across the 20 different sectors in which the C zech economy has been split. Our results grasp the short‐run impact. The higher labour intensity of national firms leads them to different patterns of production and labour demand, compared with MNE s operating within the same sector. The demand side of the model (particularly, exports and private consumption) drives the evolution of production and labour demand across sectors. Regarding prices, we also find a differential pattern between both types of firms within and across sectors. Our analysis offers detailed evidence on how the impact of MNE s will differ depending on the sector to which they arrive. Finally, the aggregate results suggest that a completely different microeconomic panorama may underlie rather similar macroeconomic outcomes.