Work

International Trade, Multinational Activity, and Corporate Finance

Year: 2014

Type: report

Abstract: An emerging new literature brings unique ideas from corporate finance to the study of international trade and investment.Insights about differences in the development of financial institutions across countries, the role of financial constraints, and the use of internal capital markets are proving central in understanding international economics.The ability to access financial capital to pay fixed and variable costs affects choices firms make regarding export entry and operations, and, as a consequence, influence aggregate trade patterns.Financial frictions and the use of internal capital markets shape decisions that multinationals make regarding production locations, integration, and corporate governance.This article surveys this recent research with the goal of highlighting the main themes it explores, the key results it establishes, and the leading open questions it raises.

Source: National Bureau of Economic Research

DOI: 10.3386/w20634

Authors: C. Fritz Foley, Kalina Manova

Institutions: National Bureau of Economic Research, Harvard University, Stanford University

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funders: Harvard Business School, Economic and Social Research Council