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date: 23 April 2021

Abstract and Keywords

Multinational corporations (MNCs) and production networks are responsible for a large and perhaps growing share of international trade. Some observers describe this trend as the sum of economic flows responding to relative factor intensities of processes and relative factor endowments of locations. Others, however, view it as strategic behavior by organizations eager to control assets and exercise influence. This chapter shows that scholars have used both of these lenses to study investment and trade linkages in East Asia, North America, and Europe. While a structural approach emphasizing organizations and strategy now seems more common in the analysis of trends in East Asia and North America, where dominant firms have built elaborate production networks, a liberal approach emphasizing west-to-east foreign direct investment continues to prevail in the analysis of Europe.

Keywords: multinational corporations, global production networks, international fragmentation, global value chain, production sharing, vertical trade, vertical division of labor, platform leadership

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