Abstract
This chapter focuses on three important theories that provide the basis for microcosmic global production network (GPN) studies, that is, multinational corporations (MNCs) theory, new classical trade theory, and “new” new trade theory, as well as their interpretation of GPNs. The MNCs’ theory can explain such issues as the formation and evolution of GPNs, the scale and form of GPNs, the boundary of the firm, and the dynamic governance of GPNs. The new classical trade theory explores technology transfer and spillover, trade in intermediate goods and inputs, trade and economic growth, industrial upgrading, increase in employment, MNCs’ industrial organization, and gains from trade on the microlevel. The “new” new trade theory can explain the heterogeneity and power asymmetry of firms in GPNs, and can be used to analyze the influence of firms’ organizational form on international trade and GPNs and in particular, the features and causes of international trade within MNCs.
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