Are Regional Concentrations of OECD Exports and Outward FDI Consistent with Gravity? |
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Authors: | Walid Hejazi |
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Institution: | (1) University of Toronto, Canada |
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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. |
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Keywords: | F21 F23 |
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