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The Location of the United States' FDI Under the Share Gravity Model

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  • Felipa De Mello-Sampayo

Abstract

This paper examines the geographical distribution of US MNEs FDI using the share gravity model, which adds a competition factor to the classical gravity formulation. The aim is to show that, unlike previous applications of the gravity model to FDI, the share of FDI pertaining to a location is determined not only by its own characteristics but also by those of competing locations. A dynamic share gravity model is estimated for a panel of both industrialised and developing countries using five alternative measures of FDI. The results vindicate the superiority of the share relative to the classical version of the gravity model in that the competition factor has a significantly negative impact on the FDI share.

Suggested Citation

  • Felipa De Mello-Sampayo, 2007. "The Location of the United States' FDI Under the Share Gravity Model," International Economic Journal, Taylor & Francis Journals, vol. 21(4), pages 491-519.
    • Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:491-519
    DOI: 10.1080/10168730701529942
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    References listed on IDEAS

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    1. James R. Markusen & Anthony J. Venables, 2021. "The theory of endowment, intra-industry and multi-national trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 4, pages 69-94, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. de Mello-Sampayo, Felipa & de Sousa-Vale, Sofia & Camões, Francisco, 2010. "Delaying the timing of offshoring low-skilled tasks," Economic Modelling, Elsevier, vol. 27(5), pages 951-958, September.
    2. Felipa Mello Sampayo, 2006. "The Geographic Distribution of Economic Activities of the USA Multinational Enterprises," DEGIT Conference Papers c011_040, DEGIT, Dynamics, Economic Growth, and International Trade.
    3. 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.
    4. Felipa De Mello-Sampayo, 2016. "A Spatial Analysis of Mental Healthcare in Texas," Spatial Economic Analysis, Taylor & Francis Journals, vol. 11(2), pages 152-175, June.
    5. Felipa de Mello-Sampayo, 2017. "Competing-destinations gravity model applied to trade in intermediate goods," Applied Economics Letters, Taylor & Francis Journals, vol. 24(19), pages 1378-1384, November.
    6. Tingvall, Patrik Gustavsson, 2010. "Offshoring and Corruption: Does Corruption Matter," Working Paper Series in Economics and Institutions of Innovation 237, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    7. de Mello-Sampayo, Felipa, 2014. "Gravity for Health: an Application to State Mental Hospital Admissions in Texas," MPRA Paper 59758, University Library of Munich, Germany.
    8. Harach, Monika & Rodriguez-Crespo, Ernesto, 2014. "Foreign direct investment and trade: A bi-directional gravity approach," Kiel Advanced Studies Working Papers 467, Kiel Institute for the World Economy (IfW Kiel).
    9. Mateo Vasco & Lina M. Cortés & Sandra C. Gaitán & Iván A. Durán, 2012. "Aplicación del modelo gravitacional al impacto del gobierno corporativo en las fusiones y adquisiciones en Latinoamérica," Documentos de Trabajo de Valor Público 10709, Universidad EAFIT.
    10. Helga Kristjánsdóttir, 2005. "Determinants of Foreign Direct Investment in Iceland," CAM Working Papers 2005-15, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    11. Kayam, Saime Suna, 2009. "Home market determinants of FDI outflows from developing and transition economies," MPRA Paper 16781, University Library of Munich, Germany.

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