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- Title
Firm-specific Assets and the Gains from Direct Foreign Investment.
- Authors
Horstmann, Ignatius J.; Markusen, James R.
- Abstract
It is widely held that multinational enterprises arise as a consequence of the existence of knowledge-based firm-specific assets such as superior technology or management know-how. These assets are much like public goods within the firm in that they can be costlessly supplied to additional plants, thus leading to the efficiency of multi-plant production. Foreign direct investment then consists of supplying the services of the assets to foreign operations, and repatriated earnings are payments for these services. These notions are formalized in a simple model of the MNE and welfare implications are analyzed.
- Subjects
INTERNATIONAL business enterprises; FOREIGN investments; INVESTMENTS; ECONOMICS; WELFARE economics
- Publication
Economica, 1989, Vol 56, Issue 221, p41
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2554493