• Analyse the opportunities that a firm faces with respect to location when considering whether to export or to become a multinational, evaluation of differences in production costs, taxes, tariffs and growth opportunities.
• Analyse the interaction between firms, and firm and government, in connection with becoming a multinational firm.
• Explain the opportunities that multinational firms have in shifting profits, and how that could be constrained by government regulations.
• Evaluate the positive and negative aspects of multinational firms.
• Discuss the theoretical models of international aspects covered in the course.
• Apply the taught theoretical models of international economic aspects to real world situations.

The course focuses on the most profund example that we have of how firms operate in the global economy, viz. multinational enterprises.
 
The first half of the course focuses on positive aspects of multinationals' behaviour, i.e. what determines their choices of where to produce, and how to to serve foreign markets: exporting, investing abroad, or licensing its production abroad.  A central element of the course is to document that becoming multinational is an endogenous choice that accrues to the most efficient firms.
 
The second half of the course focuses on normative aspects of multinationals' behaviour, i.e. whether there are positive productivity spillover effects to domestic firms from attracting multinationals and, moreover, whether multinationals can be easily regulated by domestic governments. Within this latter issue, we focus on whether there exists a, so-called, race-to-the-bottom type of externality with respect to corporate income taxation.
 

Multinational Firms, Foreign Direct Investment, Locational Theories, Productivity Spillovers, Tax Competiton, Fiscal Externalities.
 

The course builds on knowledge from Microeconomics and Industrial Organization. Knowledge of International Economics will be helpful.

Navaretti, G.B. and A. Venables. 2004. “Chapter One: Facts and Issues,” in Multinational Firms in the World Economy, Princeton University Press.

Melitz, M., E. Helpman, and S. Yeaple, 2004, “Export Versus FDI with Heterogeneous Firms”, American Economic Review, 94, 300-316.

Ethier, W. and J. Markusen. 1996. “ Multinational Firms, Technology Diffusion and Trade” Journal of International Economics, 41, 1-28.

Carr, D., J. Markusen, and K. Maskus, 2001, “Estimating the Knowledge Capital Model of the Multinational Enterprise”. American Economic Review 91, 694-708.

Hanson, G., R. Mataloni, and M.Slaughter, 2001, "Expansion Strategies of U.S. Multinational Firms, Bureau of Economic Analysis WP2001-01.

Hanson, G., R. Mataloni, and M.Slaughter, 2005, “Vertical production networks in multinational firms”, Review of Economics and Statistics 87, 664-678.

Aitken, B. And A. Harrison, 1999, “ Do Domestic Firms benefit from Direct Foreign Investment? Evidence from Venezuela” American Economic Review 89, 605-618.

Javorcik, B.S., 2004, Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers through Backward Linkages  American Economic Review 94, 605-627.

Kaplan, R.S. and A.A. Atkinson, 1998, Advanced Management Accounting, Prentice-Hall, Chapters 7 and 9

Nielsen, S.B. (2015), Notes on international taxation

Haufler, A. and I. Wooton (1999), Country size and tax competition for foreign direct investment,Journal of Public Economics 71, 121-139.

Devereux, M. and  R.Griffith, 1998, Taxes and the location of production: evidence from a panel of US multinationals  Journal of Public Economics 68, 335-367.

Nielsen, S.B. (2013), Transfer pricing: roles and regimes, Working Paper, ECON, CBS, December 20, 2013.

Nielsen, S.B. (2014), Notes on transfer pricing, taxes and incentives.

Huizinga, H. and L. Laeven (2008), International profit shifting within multinationals: A multi-country perspective, Journal of Public Economics 92, 1164-1182.

Fuest, C., C. Spengel, K. Finke, Jost H. Heckemeyer and H. Nusser (2013),

Profit Shifting and “Aggressive” Tax Planning by Multinational Firms: Issues and Options for Reform

World Tax Journal, October 2013, 307-324

Nielsen, S.B., P. Raimondos-Møller, and G. Schjelderup, 2010, " Company taxation and tax spillovers: Separate accounting versus formula apportionment", European Economic Review 54, 121-132.

Devereux, M.P., Loretz, S. (2008) ‘ The effects of EU formula apportionment on corporate tax revenues.’ Fiscal Studies 29, 1-33.