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American Economic Review: Vol. 96 No. 5 (December 2006)
AER Volume. 96, Issue 5 | 
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Accounting for the Growth of MNC-Based Trade Using a Structural Model of U.S. MNCs
Article Citation
Feinberg, Susan E., and
Michael P. Keane. 2006. "Accounting for the Growth of MNC-Based Trade Using a Structural Model of U.S. MNCs."
American Economic Review,
96(5): 1515-1558.
DOI: 10.1257/aer.96.5.1515
DOI: 10.1257/aer.96.5.1515
Abstract
In recent decades, U.S. foreign trade grew much faster than GDP, but there is no
consensus why. Notably lacking is an understanding of the role of multinational
corporations (MNCs), which mediate over half of world trade. We use Bureau of
Economic Analysis data on U.S. MNCs to study the rapid growth of MNC-based
trade from 1983 to 1996. Using a model of U.S. MNCs and Canadian affiliates, we
decompose this growth by source. Tariff reductions can largely explain increases in
arms-length MNC-based trade. But intra-firm trade growth is attributed mostly to
?technical change.? We present additional evidence suggesting just-in-time production
facilitated intra-firm trade. (JEL F13, F14, F23)
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Authors
Feinberg, Susan E.
Keane, Michael P.
Keane, Michael P.
