Most FDI takes place between the developed countries, which suggests that the market-seeking motive is important for understanding FDI. However, given the stylized fact that trade barriers (e.g. transportation costs and financial barriers) have declined over the past 20 years, models that aim to...

In this paper we want to shed some light on the empirical relevance of the new economic geography. Using one of the central features of the core new economic geography models, namely that wages have the tendency to fall the further one moves away from centres of economic activity, we investigate...

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Structural decomposition techniques are used to break down the changes in one variable into the changes in its determinants. Typically, these determinants are assumed to be independent. Using the decomposition of value added growth as a prototype example, this paper examines the phenomenon that...