Firm heterogeneity and the structure of U.S. multinational activity

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Abstract

We use firm-level data for U.S. multinational enterprises (MNEs) and the model of firm heterogeneity presented in Helpman, Melitz, and Yeaple [Helpman, E., Melitz, M., Yeaple, S., 2004. Exports versus FDI with heterogeneous firms. The American Economic Review 94 (1), 300-316.] to make four empirical contributions. First, we show that the most productive U.S. firms invest in a larger number of foreign countries and sell more in each country in which they operate. Second, we assess the importance of firm heterogeneity in the structure of MNE activity. Third, we use the model to identify the mechanisms through which country characteristics affect the structure of MNE activity. Finally, we assess the model's shortcomings in order to inform the development of new theory.

Original languageEnglish (US)
Pages (from-to)206-215
Number of pages10
JournalJournal of International Economics
Volume78
Issue number2
DOIs
StatePublished - Jul 1 2009

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

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