Locational Determinants and Ranking of Host Countries: An Empirical Assessment.

An empirical analysis of the intra-OECD distribution of foreign affiliates among OECD host countries, taking into account the simultaneity between local production and exports as modes of foreign penetration, shows the importance of size and relatedness of host markets when choosing which foreign country to serve, independent of the size of the home country. In addition, the combination of both variables provides an extra stimulus for local production as well as exports, but more so for the first than for the latter mode. Cost considerations as well as host government intervention are less pronounced as location factors among OECD countries. Copyright 1991 by WWZ and Helbing & Lichtenhahn Verlag AG