Resource title

Multinational enterprises and new trade theory : evidence for the convergence hypothesis

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Resource description

According to the ‘convergence hypothesis’ multinational companies will tend to displace national firms and trade as total market size increases and as countries converge in relative size, factor endowments, and production costs. Using a recent model developed by Markusen and Venables (1998) as a theoretical framework, we explicitly develop empirical measures to proxy bilateral FDI between two countries and address their properties with regard to the convergence hypothesis. Using a panel of data of country pairs over the years 1985-96 we econometrically test for the relationship between convergence and bilateral FDI. Our results provide some empirical support for the convergence hypothesis.

Resource author

Salvador Barrios Cobos, Holger Görg, Eric Strobl

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/2721

Resource license

Adapt according to the presented license agreement and reference the original author.