ABSTRACT
A very large proportion of world trade is today controlled by MNCs. More than three-quarters of total exports of goods, and as much as one-third of world exports, have been estimated to consist of intra-firm deliveries rather than transactions at arm’s length (UNCTAD, 1994). Nevertheless, conventional trade theory has not paid much attention to MNCs. Trade was explained by comparative advantages, generated by inter-country differences in factor endowments and technology, while production factors were assumed more or less immobile with respect to national boundaries.
