Multinational enterprise: The old and the new in history and theory

Abstract

This historical paper reveals that international economic integration is neither new or necessarily driven by technological change, and examines the traditional, pre-1940, “vertical” multinational, which invested up- and downstream of their innovation, in light of this fact. An analysis is given of how this older multinational relates to current, “horizontal” firms, which produce a number of products in several places. Using the language of industrial organization theory, this paper shows that technological discoveries of the late nineteenth century explain the shift in multinational organization and the emergence of global oligopolies.