International trade, market risk, and multinational corporations [Elektronische Ressource] / von Qi Su

Informations

• Publié par: humboldt-universitat_zu_berlin
• Publié le: 01 janvier 2003
• Nombre de lectures: 4
• Langue: English

Extrait

International Trade, Market Risk, and
Multinational Corporations
D I S S E R T A T I O N
zur Erlangung des akademischen Grades
doctor rerum politicarum
(dr. rer. pol.)
im Fach Wirtschaftswissenschaft
eingereicht an der
Wirtschaftswissenschaftlichen Fakult¨at
Humboldt-Universit¨at zu Berlin
von
Herr MA, MSc Qi Su
geboren am 31.08.1974 in P. R. China
Pr¨asident der Humboldt-Universit¨at zu Berlin:
Prof. Dr. Jur¨ gen Mlynek
Dekan der Wirtschaftswissenschaftlichen Fakult¨at:
Prof. Michael C. Burda, Ph.D.
Gutachter:
1. Prof. Dr. Joachim Schwalbach
2. Prof. Lars-Hendrik Roller,¨ Ph.D.
eingereicht am: 03. Februar 2003
Tag der mundlic¨ hen Prufung:¨ 10. Juli 2003Acknowledgments
Affected by a few years’ research and studies, my interests have been gradually
formed around theoretical economics and its application to observe international
economic phenomena. Herein lies the dissertation on international trade, market
risk and multinational corporations, a latest research result along the academic line.
Recalling the writing process, I owe intellectually to many people. It is Prof.
Dr. Joachim Schwalbach who advised me in the field of multinational corporations
andinternationaleconomics. Iamdeeplyindebtedtohisinvaluablesupervisionand
friendship. Great appreciation is obliged to Prof. Lars-Hendrik R¨oller, Ph.D., my
second referee, for his intuitive and insightful comments.
Discussion with my colleagues of the Institute of Management, Clemens Ober-
hammer, and especially Steffen Brenner helped smooth my authorship.
Thanks are also due to Prof. Jim Ford, Ph.D. for his helpful comments on the
dissertation, and Prof. Harald Uhlig, Ph.D., giving me precious support when I
transferred the dissertation focus from the theory of economic growth to that of
multinational corporations.
Special gratitude should go to Prof. Linsheng Wang, Ph.D., for the long term
confraternity between a teacher and a student.
It is no need to say that working at the Sonderforschungsbereich 373 “Quantifi-
cation and Simulation of Economic Processes” (Project C4: Dynamics of Competi-
tion), and participating in the workshops of the Ph.D. program “Applied Microeco-
nomics” at Humboldt-University and Free University Berlin, and seminars such as
Schumpeter and Brown Bag for macroeconomics stimulates my inspiration in this
research.
The biggest debt, however, is bound to my parents. Without their many years’
unselfish love and care, the dissertation can never be finished. Therefore, the dis-
sertation is written for them.Contents
1 Why would intraindustry trade or investment more likely happen
between developed countries? 8
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.2 Theoretical foundation . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.3 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.3.1 When the home country is developing . . . . . . . . . . . . . . 19
1.3.2 When the home country is developed . . . . . . . . . . . . . . 26
1.4 Further discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2 Why is it important for a multinational corporation to hold tech-
nological leadership? A technological transfer perspective 43
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.2 Theoretical foundation . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.3 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.3.1 Technological transfer . . . . . . . . . . . . . . . . . . . . . . 52
2.4 Policy implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
2.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3 Multinational corporations and market risk: A real market per-
spective 62
3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
3.2 Theoretical foundation . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.3 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
3.3.1 When the market risk of the two countries is uncorrelated . . 68
3.3.2 When the market risk of the two countries is correlated . . . . 71
3.4 Further extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
3.5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
4 Multinational corporations and factor movement 78
4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
4.2 Theoretical foundation . . . . . . . . . . . . . . . . . . . . . . . . . . 80
i4.3 The model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
4.4 Discussion of production/economic convergence . . . . . . . . . . . . 92
4.4.1 Economic convergence . . . . . . . . . . . . . . . . . . . . . . 97
4.4.2 Economic divergence . . . . . . . . . . . . . . . . . . . . . . . 99
4.5 Policy implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
4.5.1 Adopting scientific policies in introducing international pro-
ductive factors . . . . . . . . . . . . . . . . . . . . . . . . . . 103
4.5.2 Creatinggoodconditionstoavailinternationalproductivefac-
tors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
4.5.3 Striving for a better social environment . . . . . . . . . . . . . 104
4.5.4 Improving fairer welfare distribution between developed and
developing countries . . . . . . . . . . . . . . . . . . . . . . . 105
4.6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Appendix A 108
Appendix B 117
Concluding remarks 122
References 126
Erkl¨arung 140
iiList of Figures
1 Figure 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2 Figure 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3 Figure 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4 Figure 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5 Figure 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6 Figure 6 (when time is t, t ∈ [0,10]) . . . . . . . . . . . . . . . . . . 94
7 Figure 7 (when time is t, t ∈ [0,10]) . . . . . . . . . . . . . . . . . . 94
28 Figure 8 (when time is t , t∈ [0,10]) . . . . . . . . . . . . . . . . . . 94
29 Figure 9 (when time is t , t∈ [0,10]) . . . . . . . . . . . . . . . . . . 95
10 Figure 10 (when time is t, t ∈ [0,20]) . . . . . . . . . . . . . . . . . . 95
211 Figure 11 (when time is t , t ∈ [0,20]) . . . . . . . . . . . . . . . . . 95
12 Figure 12 (when time is t, t∈ [0,20]) . . . . . . . . . . . . . . . . . . 96
213 Figure 13 (when time is t , t∈ [0,20]) . . . . . . . . . . . . . . . . . . 96
iiiList of Tables
Table 1 97
Table 1’ 98
Table 2 99
Table 2’ 99
ivIntroduction
Literature related with multinational corporations is voluminous. But a perfect
cognizance of multinational corporations is far from accomplished. In other words,
it is far early to say that it is time to terminate studies with regard to multinational
corporations. Westillhavealottodoonthewayofpursuingabetterunderstanding
of their behavior. Based on the objective point, composing this dissertation is in
order for paying its own contribution to the ocean of knowledge in multinational
corporations theory and related theoretical issues.
In the academia, the widely cited source literature about multinational corpora-
tions is countable. Among the most classical, one can find they are Hymer (1976),
Buckley and Casson (1976), Dunning (1977, 1980, 1981, 1988) and Rugman (1980).
These works intend to explain why a multinational corporation would exist and
what drives foreign direct investment (FDI), where Dunning’s in particular have
doneavaluablesynthesis, leadingtothefamousOLI(ownershipadvantage-location
advantage-internalization advantage) paradigm.
On the one hand, these theories are even not enough to throw lucidity upon the
most fundamental aspect – why a multinational corporation would exist, for the
reasons of FDI are far more than what have been described by them, let alone other
1relevant ones as a result of existence of FDI .
On the other hand, the theories of multinational corporations are, to a large ex-
tent, independent of international trade theory (traditional interindustry trade, and
the more interesting intraindustry and intrafirm trade is not formally dealt with in
these theories), although it is potentially possible that they can be used to explain
some trade phenomena. For example, the theory of ownership advantage has es-
sentially the same core compared to the theory of Ricardo’s comparative advantage
(Ricardo, 1817). Henceforth, traditional trade pattern or specialization of produc-
tion can be explained by the theory of ownership advantage in principle. Another
multinational corporations theory, i.e., the theory of internalization advantage may
be used to explain partially intrafirm trade, since the theory tells it can be rational
to conduct trade or technological transfer within the interiority of a corporation.
1Chung (2001) argues “there has been no complete theory of the multinational firm”.
1However,