Interdependence in Multinational Production Networks

Maggie Xiaoyang Chen
2010 Social Science Research Network  
The majority of multinational ...rms today operate a multilateral production network. Most existing empirical analyses have, however, focused on ...rms'choice between producing at home and investing overseas and assumed that a ...rm's decision to invest in a foreign country is independent of its locations in third countries. This paper examines the e¤ect of existing production network on multinationals' entry decision. Using detailed French multinational subsidiary level data, the paper ...nds
more » ... trong evidence of horizontal and vertical interdependence across multinationals' foreign production locations. There is, however, little evidence of horizontal interdependence between home-country production and foreign investment when the third-country e¤ects are taken into account, constituting a sharp contrast to the conventional emphasis. This result is robust to the various speci...cations and sensitivity analyses undertaken in the paper, and highlights the importance of investigating the causes and e¤ects of foreign direct investment in the context of multinational production network.
doi:10.2139/ssrn.1630454 fatcat:ujekir4turfbhdynkw4shtdmem