MSc IBE - SS2010

Jung & Gröschl

Microeconomics of Globalization: Multinational Firms

Problemset 1
A portrait of multinational rms

April, 27 2010

This problem set is designed to give you the opportunity to portrait the charac-
teristics and activities of multinational rms. You are asked to choose one of the
references listed below and to review the article in detail. You have to prepare a
presentation of about 45 minutes. Presentations will be followed by a discussion
of 15 minutes.
We encourage you to team up to small groups. However, in order to obtain points
in class, you must hand in your own presentation and be prepared to
present it and defend it on your own. Please upload your presentation via
ILIAS. Presentations are due on Monday April 26, 2010 3 p.m.. Please do not
forget to note your name and matriculation number on your le.

Reference 1: The happy few

Mayer, T. and G.I.P. Ottaviano (2008), `The happy few: The internationalisation
of European rms', Intereconomics May/June.
Along your talk, please answer the following questions
1. What are the stylized facts on European rms involved in international ac-
tivities through exports or FDI? Use gures from the paper to illustrate your
explanations.
2. What are the extensive and the intensive margins of exports and FDI?
3. What policy implications can be drawn from the authors' ndings? Interpret.
In case you need further background reading, please refer to Mayer, T. and G.I.P.
Ottaviano (2007), `The happy few: The internationalization of European rms.
New facts based on rm-level evidence', Bruegel Blueprint 3.
 MSc IBE - SS2010
Jung & Gröschl

Reference 2: Trade in Services (UK)

Breinlich, H. and C. Criscuolo (2009), `International trade in services: a portrait
of importers and exporters', CEP Discussion Paper, Vol 901.
Along your talk, please answer the following questions
1. What is trade in services? Explain.
2. What are the characteristics of UK rms engaging in international trade in
services?
3. What are the extensive and the intensive margin of trade in the context of
service trade?
Reference 3: FDI - Firm-level Evidence (Germany)
Buch, C.M. et al. (2005), `Determinants and eects of foreign direct investment:
evidence from German rm-level data', Economic Policy, Vol 20, No.41, 52-110.
Along your talk, please answer the following questions
1. What is the dierence between horizontal and vertical foreign direct invest-
ment?
2. Why do German rms engage in multinational activities? Describe the em-
pirical results on motives and investment decisions.
3. How do the regional, geographical and internationalization patterns on the
sectoral- and the rm-level look like?
4. Do the authors nd empirical evidence on agglomeration eects in the inter-
nationalization behavior of German rms? Use table 12 to explain.