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Are Regional Concentrations of OECD Exports and Outward FDI Consistent with Gravity?

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  • Walid Hejazi

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. Copyright International Atlantic Economic Society 2005

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  • Walid Hejazi, 2005. "Are Regional Concentrations of OECD Exports and Outward FDI Consistent with Gravity?," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 33(4), pages 423-436, December.
    • Handle: RePEc:kap:atlecj:v:33:y:2005:i:4:p:423-436
    DOI: 10.1007/s11293-005-2870-2
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    Cited by:

    1. Karpaty, Patrik & Gustavsson Tingvall, Patrik, 2011. "Offshoring of Services and Corruption: Do Firms Escape Corrupt Countries?," Working Papers 2011:2, Örebro University, School of Business, revised 28 May 2012.
    2. Walid Hejazi, 2007. "Reconsidering the concentration of US MNE activity: Is it global, regional or national?," Management International Review, Springer, vol. 47(1), pages 5-27, February.
    3. Elitsa R. Banalieva & Michael D. Santoro & Joy Ruihua Jiang, 2012. "Home Region Focus and Technical Efficiency of Multinational Enterprise," Management International Review, Springer, vol. 52(4), pages 493-518, August.
    4. Dorothee J. Feils & Manzur Rahman, 2011. "The Impact of Regional Integration on Insider and Outsider FDI," Management International Review, Springer, vol. 51(1), pages 41-63, February.
    5. Patrik Karpaty & Patrik Tingvall, 2015. "Service Offshoring and Corruption: Do Firms Escape Corrupt Countries?," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 363-381, December.

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    More about this item

    Keywords

    F21; F23;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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