International trade, market risk, and multinational corporations

by Su, Qi

This thesis is mainly aimed to explain four topics in the world economy in four chapters respectively: 1) why intraindustry trade or investment concentrates in developed countries; 2) Why it is important for a multinational corporation to hold technological leadership; 3) why being a multinational can be more superior in terms of risk aversion; 4) why free factor mobility is not sufficient to help production convergence between developed and developing firms. The major findings show that traditional trade theory can accommodate new phenomena of trade and investment; restrained technological transfer has trivial effect on the transferees' markets; being a multinational corporation can more conformably bear the risks variously sourced from different markets; and free factor movement is not sufficient to promote production convergence among multinational corporations and thus economic convergence among countries.