Southern Multinationals

Investments in the North by Southern firms are still unusual. While such investments may be motivated by tariff jumping and internalization, casual empiricism suggests that such reverse DFI may be motivated by improved technology access. This paper examines, within a theoretical framework, whether enhanced technology access provides sufficient motivation for the endogenous formation of Southern Multinationals. Southern firms are most likely to establish Northern subsidiaries in industries with rapid technological obsolescence, when global sales are high relative to DFI costs, and when domestic production costs are high. Neither market power nor significant market shares are a pre-requisite for Southern Multinationals