Multinational activity and country characteristics in OECD countries

Abstract

This article uses data on multinational activity in OECD countries to test three alternative models of multinational production: the vertical multinational firm model the horizontal multinational firm model and the knowledge capital model. Unlike the evidence from US data in Markusen and Maskus' work, the results in this article show that the knowledge capital model performs significantly better than the horizontal model. The article presents the empirical evidence and concludes with a discussion of the strengths and weaknesses of the OECD and US data.