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Economic Geography and Multinational Enterprise

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  • Marzia Raybaudi‐Massilia

Abstract

This paper proposes an economic geography model with two countries, two sectors, and two factors of production, allowing for single‐plant and double‐plant firms. Location patterns are studied by assessing the existence of the various equilibrium configurations. Income and wages are allowed to change following defection, and it is assumed that labor migrates towards the country with highest real wages. It is shown that the tendency towards configurations characterized by an “industrial core” and an “agricultural periphery” predicted by models which do not allow for the existence of FDI, is reduced by the presence of multinationals.

Suggested Citation

  • Marzia Raybaudi‐Massilia, 2000. "Economic Geography and Multinational Enterprise," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 1-19, February.
    • Handle: RePEc:bla:reviec:v:8:y:2000:i:1:p:1-19
    DOI: 10.1111/1467-9396.00202
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    Cited by:

    1. Kristian Behrens & Pierre M. Picard, 2007. "Welfare, home market effects, and horizontal foreign direct investment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(4), pages 1118-1148, November.
    2. Toulemonde, Eric, 2007. "Home Market Effect versus Multinationals," IZA Discussion Papers 2829, Institute of Labor Economics (IZA).
    3. Rodrigo Alegria, 2006. "Countries, Regions and Multinational Firms: Location Determinants in the European Union," ERSA conference papers ersa06p143, European Regional Science Association.
    4. Peter Egger & Stefan Gruber & Mario Larch & Michael Pfaffermayr, 2007. "Knowledge–capital meets new economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(4), pages 857-875, December.
    5. Kenmei Tsubota, "undated". "Location and organization choice of firms," KIER Working Papers 679, Kyoto University, Institute of Economic Research.

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