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Indian Industrialisation, Multinational Enterprises and Gains from Trade

Broll, Udo and Gilroy, Bernard Michael (1986): Indian Industrialisation, Multinational Enterprises and Gains from Trade.


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Intra-foreign direct investment flows indicate an intensive specialization effect within the various domestic branches of the international economy combined with an increasing expansion of the differentiated product sortiments of the world's multinational firms. Rationalisation of operations on a world basis allows firms to achieve increased economies of scale through international division of production. Applying a revealed preference argumentation a simple two-good, two-factor, two-country model including the empirically observed price-cost margin distortions in Indian manufacturing industries is formulated in the following in which the effects of multinational enterprises upon tbe gains-from-trade theorem may be oxamined theoretically.

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