Background: It has been well established that value creation by MNEs is becoming increasingly dispersed around the globe to take advantage of countries’ cost, labor quality, knowledge base, infrastructure, proximity to customers, competitors, and the like. Despite current challenges to the global trading system, the growing importance of global MNE value chains for the developed as well as developing economies has been recognized by the large share of intermediate inputs estimated to be between 56 percent and 73 percent of trade flows in goods and services among the developed economies. Against the conceptual backdrop derived from international business-- and international economics discipline and with the aid of U.S. data on MNE transactions between parents and their overseas subsidiaries-- the paper examines broadly, the determinants of intra-MNE cross border trade. Specific issues addressed in the paper include: the changing role of distance, relationship between trade in goods and trade in services, and the relative importance of country-specific factors vs. firm-specific factors. Implications for the future of offshoring and international technology diffusion will also be discussed.
Data/ Methods: Regression analysis using cross-section and time-series data for a sample of countries published by the U.S. Department of Commerce, the World Bank, and other sources.
Results/ Expected Results: We expect to provide empirical support for the ownership, location, and internalization (OLI) framework articulated by Dunning (2009), among others. Implications for the future of offshoring and international technology diffusion will be discussed.