On the Differential Behaviour of National and Multinational Firms: A Within‐ and Across‐sectors Approach

This paper looks for different patterns of behaviour of national firms and multinational enterprises (MNEs). Its main contribution is the use of a computable general equilibrium perspective to analyse firms’ performance. The model is calibrated for the case of theCzechRepublic, which has been a very attractive foreign direct investment location in the last three decades. We replicate the arrival ofMNEs to different sectors of this country in turn and analyse the responses of both types of firms across the 20 different sectors in which theCzech economy has been split. Our results grasp the short‐run impact. The higher labour intensity of national firms leads them to different patterns of production and labour demand, compared withMNEs operatingwithinthe same sector. The demand side of the model (particularly, exports and private consumption) drives the evolution of production and labour demandacrosssectors. Regarding prices, we also find a differential pattern between both types of firmswithinandacrosssectors. Our analysis offers detailed evidence on how the impact ofMNEs will differ depending on the sector to which they arrive. Finally, the aggregate results suggest that a completely different microeconomic panorama may underlie rather similar macroeconomic outcomes.