A Study On The Trade Effect Of Multinational Corporations In Service Industry

Service MNEs began to emerge in the world market with the internationalization of manufacturing firms. The ICT revolution, on the one hand, can strengthen the severability, storability and tradability. On the other hand, the revolution can also provide the development of service MNEs with new motivation. The heterogeneity of services make the service MNEs present the global feature of “heterogeneity” whose geographical layout shows the characteristics of urban agglomeration. There is a picture in which these Service MNEs develop rapidly and the global trade has new characteristics of “trade-investment-service nexus”. At the same time, China has become the main destination of service FDI. Shanghai, as an international city of trading center, has become increasingly important. With the background, it’s meaningful both in practice and in theory to explore the trade effects of service MNEs.There is a gap which has hitherto existed in this field, while some literatures refer to relevant issues. In this paper, we use many research methods, including the literature review, theoretical modeling, comparative studies, and econometrics analysis method, to explore trade effects of service MNEs. On the basis of these research methods, the main research conclusions of this paper are as follows:Service MNEs have trade volume effect and their economic activities fall into three types: FDI, NEMs and trade in independent firms. Among these types, the third type expands the size of trade and FDI in service precede to trade, which is the trade in service in the form of commercial presence. In the terms of different pattern of service FDI, vertical FDI has trade creation effect, while the mixed FDI(most are trade platform)increase the size of trade through the middle of the role. Even if the horizontal FDI can also promote the scale effect, FDI in service is increasingly the driver of the in growth of trade flow in the world. As for the feature of NEMs, this type generates trade.Thus, the development of services MNEs promote the growth of trade volume in service across the world and within the service MNEs.Service MNEs have trade structure effect. On the one hand, duo to heterogeneous service products, service MNEs’ global activities are also heterogeneous. Service MNEs in trade and finance industries got into international market more early and their productivity tended to be higher, bringing large trade volume. Information service has the feature of severability, so such industries have large scale of trade, generating the structure effect. On the other hand, Service MNEsin trade and finance industries got into international market more early, which promotes the degree of open globally and accounts for the most part of FDI in the world. Taking the two aspects above into consideration, service MNEs have trade structure effect.Service MNEs have trade gains effect, which means the domestic value added integrated into GVCs are promoted. Service, as the important intermediate inputs in global production and trade, plays a significant connecting role in GVCs. The special position of service determines the status of Service MNEs in GVCs governance, while the form of GVCs governance determine the gains of trade. By the way, U.S. obtained the main gains of value added in service trade.Service MNEs have trade location effect. Trade-related services locate in the global cities of trading center. With the local feature of international trade center,these cities gathered service MNEs related to trade, which not only provided service for goods trade, but also promoted cross-border trade, making international trade center transform into global center to provide service for trade. All of these functions present the contribution of value added in service and employment.This research consists of seven chapters. The first chapter is introduction, which introduces the background and purpose of this research, research methods and structure, literature review and contribution. Chapter 2 is theoretical framework,including MNE theory, international trade theory, GVCs theory and the theory of international trade center. Chapter 3 is about the development stages, characteristics of service MNEs, internationalization motives, feature of global management,location distribution and manufacturing multinationals. Chapter 4 is the hypotheses of trade volume effect, trade structure effect, trade gains effect and trade location effect.Chapter 5 is the regressions and test of the four trade effect. Chapter 6 is empirical evidence of China.Chapter 7 is the conclusions and policy recommendations.This paper has done exploratory research in the following aspects: First,identifing three types of service MNEs.Second, proposing goods and service trade effect.Third, hypothesising literatures structure of trade effect of service MNEs.