PhD Project: Globalisation, Multinational Enterprises and post-Keynesian Theory

Ryan Woodgate (PhD candidate Université Paris Sorbonne Nord; HWR Berlin; IPE Berlin)
Supervisors: Prof. Eckhard Hein, HWR Berlin; Dr.Antoine Godin, Agence Française de Développement


The most recent wave of globalisation is one of the defining economic processes of modern times and has, as such, warranted a great deal of examination within post-Keynesian theory. However, one of the unique characteristics of modern globalisation—namely the rise of multinational enterprises (MNEs) in number, size, and influence—has received far less attention. My doctoral project therefore aims to model the macroeconomic impact of MNEs within a post-Keynesian framework. 

Where globalisation is defined in the post-Keynesian literature, it is often with reference to the significant increase in international trade and capital flows seen in recent decades. However, modern globalisation also entails the creation and management of globalised production chains by MNEs, where factors of production are spread across borders and shifted as material costs, wages, exchange rates, taxes, subsidies, and regulation change. MNEs have become so important in this regard that, for example, data from the OECD AMNE database show that around two-thirds of the value of all exports worldwide are due to MNEs alone.

My first paper from this doctoral project (Woodgate, forthcoming) determines the conditions under which the government of a particular economy could conceivably attract more in FDI than it loses it corporate tax revenue through engaging in tax competition. My model indicates there is a necessary condition—the economy in question must be sufficiently small—and a sufficient condition—the effective corporate tax rate must fall by a multiple of any fall in the same rate in the rest of the world. The latter, which is a kind of fundamental coordination problem, gives reason to the finding that few economies successfully managed to boost demand through tax competition in recent decades. The ongoing race to the bottom in corporate tax rates thus does not seem to benefit the vast majority of economies that are participating in it.

Further questions to be addressed in this doctoral project include the following: 

  • Given that MNEs often use countries like Ireland, Singapore, and China as an export platform yet also repatriate the resulting profits to the country where the parent MNE is headquartered, to what extent do net exports due to MNEs truly represent a boost to domestic demand? 
  • Relatedly, how can we understand the role of MNEs in the development of global imbalances?
  • To what extent do MNEs, in their search for cheap labour and low taxes and in their repatriation of profits to mostly developed countries, exacerbate functional and/or personal inequality? 
  • How can the effects of profit shifting be understood within post-Keynesian theory?

Besides empirical analysis, the methods employed to address these questions are to include developing extensions of the canonical Kaleckian models as well as a stock-flow consistent approach.

Related publications

  • Woodgate, R. (Forthcoming) “Can Tax Competition Boost Demand? Causes and Consequences of the Race to the Bottom in Corporate Tax Rates” Review of Keynesian Economics