European Integration and Geographical Concentration of Swedish Multinationals*

This paper investigates whether European integration has an effect on the geographical con-centration of Swedish multinationals<92> production inside the European Union. The results indi-cate that agglomeration and dispersion forces are present, and that the relative strength of these forces has been affected by the EU integration process. In particular, the European inte-gration process has reduced intra-EU transaction costs, and thus the need of R&D intensive multinationals to engage in local production to fully appropriate the return of their assets. The results further suggest that EU integration has led Swedish MNEs to increase dispersion of production inside the European Union.