The author thanks Oscar Bajo-Rubio and Antonio G. Gómez-Plana for helpful comments and suggestions. Financial support from the Spanish Ministry of Science and Innovation, through the project ECO2011-29314-C02-02, is also gratefully acknowledged.
On the Differential Behaviour of National and Multinational Firms: A Within- and Across-sectors Approach
Article first published online: 15 JUL 2013
© 2013 John Wiley & Sons Ltd
The World Economy
Volume 36, Issue 10, pages 1294–1317, October 2013
How to Cite
Latorre, M. C. (2013), On the Differential Behaviour of National and Multinational Firms: A Within- and Across-sectors Approach. World Economy, 36: 1294–1317. doi: 10.1111/twec.12100
- Issue published online: 3 OCT 2013
- Article first published online: 15 JUL 2013
This paper looks for different patterns of behaviour of national firms and multinational enterprises (MNEs). Its main contribution is the use of a computable general equilibrium perspective to analyse firms’ performance. The model is calibrated for the case of the Czech Republic, which has been a very attractive foreign direct investment location in the last three decades. We replicate the arrival of MNEs to different sectors of this country in turn and analyse the responses of both types of firms across the 20 different sectors in which the Czech economy has been split. Our results grasp the short-run impact. The higher labour intensity of national firms leads them to different patterns of production and labour demand, compared with MNEs operating within the same sector. The demand side of the model (particularly, exports and private consumption) drives the evolution of production and labour demand across sectors. Regarding prices, we also find a differential pattern between both types of firms within and across sectors. Our analysis offers detailed evidence on how the impact of MNEs will differ depending on the sector to which they arrive. Finally, the aggregate results suggest that a completely different microeconomic panorama may underlie rather similar macroeconomic outcomes.