International Factor Movements

International Factor Movements and Multinational Firms


Over the last two decades, the number of trade agreements has grown at a particular rate. About 85 per cent of the 210 notifications in force today were concluded during this period.1 This increase in trade agreements has a significant impact on overseas operations of multinational firms (MNFs) leading to the appearance of a new foreign investment, namely Export-platform foreign direct investment (Export-platform FDI). It is defined as a foreign investment in a host country in order to export most of output to third countries. In 2000, exports to third countries as shares in total sales by American manufacturing affiliates accounted for 28 per cent. Particularly, for affiliates located in Ireland, Holland, and Belgium, those shares are respectively accounted for 71 per cent, 60 per cent, and 57 per cent (Ekholm et al., 2007). According to Ito (2013), American firms in countries such as Luxembourg, Hong Kong, Singapore, Netherlands, and Switzerland have high ratios of exports to third countries over the total sales in 2008, ranging from approximately 40 per cent to 70 per cent.



                                                                 Urooj Qureshi