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Are Regional Concentrations of OECD Exports and Outward FDI Consistent with Gravity?

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  • Walid Hejazi
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    Abstract

    A substantial amount of evidence has emerged indicating that a majority of the world's largest multinational enterprises concentrate activities in their home region. However, there are relatively few studies which test whether such concentrations are consistent with economic theory. This paper works to fill the void. It tests whether regional concentrations of OECD exports and outward FDI are consistent with predictions of a gravity model. The empirical evidence provided here indicates that exports are far more regional than the model predicts. As for FDI, the empirical evidence shows that intra-regional FDI in Europe is larger than the model predicts, whereas intra-regional FDI patterns within North America are consistent with gravity. Overall, this paper provides further support for Rugman's thesis that MNEs are best described as regional as opposed to global actors. Copyright International Atlantic Economic Society 2005

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    File URL: http://hdl.handle.net/10.1007/s11293-005-2870-2
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    Bibliographic Info

    Article provided by International Atlantic Economic Society in its journal Atlantic Economic Journal.

    Volume (Year): 33 (2005)
    Issue (Month): 4 (December)
    Pages: 423-436

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    Handle: RePEc:kap:atlecj:v:33:y:2005:i:4:p:423-436

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    Keywords: F21; F23;

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    Cited by:
    1. Karpaty, Patrik & Gustavsson Tingvall, Patrik, 2012. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Ratio Working Papers 192, The Ratio Institute.

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