Competing-destinations gravity model: an application to the geographic distribution of FDI
The competing-destinations formulation of the gravity model ensues from the fact that unlike the classical version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative locations, i.e. country-recipients are competing for Foreign Direct Investment (FDI). This article examines empirically a range of theoretical hypotheses about the determinants of FDI location in a panel data regression framework. The results of the estimation of a gravity model lend support to the proximity-concentration and internalization hypotheses. Also, the fact that FDI has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the competing-destinations version of the gravity equation over its classical formulation.
Year of publication: |
2009
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Authors: | Mello-Sampayo, Felipa de |
Published in: |
Applied Economics. - Taylor & Francis Journals, ISSN 0003-6846. - Vol. 41.2009, 17, p. 2237-2253
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Publisher: |
Taylor & Francis Journals |
Saved in:
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