NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Vertical Production Networks in Multinational Firms

Gordon H. Hanson, Raymond J. Mataloni, Matthew J. Slaughter

NBER Working Paper No. 9723
Issued in May 2003
NBER Program(s):   ITI

In recent decades, growth of overall world trade has been driven in large part by the rapid growth of trade in intermediate inputs. Much of this input trade involves multinational firms locating input processing in their foreign affiliates, thereby creating global vertical production networks. In this paper, we use firm-level data on U.S. multinationals to examine trade in intermediate inputs for further processing between parent firms and their foreign affiliates. We estimate affiliate demand for imported inputs as a function of host-country and industry trade costs, factor prices, and other variables. Among our main findings are that demand for imported inputs is higher when affiliates face lower trade costs, lower wages for less-skilled labor (both in absolute terms and relative to wages for more-skilled labor), and lower corporate income taxes. These results contrast with many findings in previous research.

download in pdf format
   (770 K)

email paper

This paper is available as PDF (770 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9723

Published: Gordon H. Hanson & Raymond J. Mataloni & Matthew J. Slaughter, 2005. "Vertical Production Networks in Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 664-678, November.

Users who downloaded this paper also downloaded these:
Hanson, Mataloni, Jr., and Slaughter w8433 Expansion Strategies of U.S. Multinational Firms
Helpman w12091 Trade, FDI, and the Organization of Firms
Ethier and Markusen w3825 Multinational Firms, Technology Diffusion and Trade
Markusen and Maskus w8334 General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence
Ando and Kimura The Formation of International Production and Distribution Networks in East Asia
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us