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  • 2015
  • Article
  • Annual Review of Economics

International Trade, Multinational Activity, and Corporate Finance

By: C. Fritz Foley and Kalina Manova
  • Format:Print
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Abstract

An emerging new literature brings unique ideas from corporate finance to the study of international trade and investment. Insights about differences in the development of financial institutions across countries, the role of financial constraints, and the use of internal capital markets are proving central in understanding international economics. The ability to access financial capital to pay fixed and variable costs affects choices firms make regarding export entry and operations, and, as a consequence, influence aggregate trade patterns. Financial frictions and the use of internal capital markets shape decisions that multinationals make regarding production locations, integration, and corporate governance. This article surveys this recent research with the goal of highlighting the main themes it explores, the key results it establishes, and the leading open questions it raises.

Keywords

Multinational Firms and Management; Investment; Trade; Corporate Finance

Citation

Foley, C. Fritz, and Kalina Manova. "International Trade, Multinational Activity, and Corporate Finance." Annual Review of Economics 7 (2015): 119–146.
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About The Author

C. Fritz Foley

Finance
→More Publications

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  • AMC: The Zero Revenue Case By: C. Fritz Foley and Donal O'Cofaigh
  • AB InBev: Brewing Up Forecasts during COVID-19 By: Mark Egan and C. Fritz Foley
  • AB InBev: Brewing Up Forecasts during COVID-19 By: Mark Egan, C. Fritz Foley, Esel Cekin and Emilie Billaud
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