This paper examines the impact of foreign management as a separate input in a competitive economy open to both international trade and international movement of productive capital. Three inputs (capital, iabor, management) are used to produce two fina...
This paper examines the impact of foreign management as a separate input in a competitive economy open to both international trade and international movement of productive capital. Three inputs (capital, iabor, management) are used to produce two final goods in a model characterized by competition, homogeneous products, and full employment. This model provides a simple starting point for the study of multinational firm activity, building on the fundamental competitive factor proportions model of production and trade. A clear distinction arises between international movements of capital and management, and international movements of the two inputs are linked. [F11, F23]