Competing-Destinations Gravity Model: An Application to the Geographic Distribution of FDI

Felipa de Mello-Sampayo (1)

1 Economics

The competing-destinations formulation of the gravity model ensues from the fact that unlike the classical version, this approach explicitly acknowledges the interdependence of the flows between a set of alternative locations, i.e. countries-recipients are competing for FDI. This paper examines empirically a range of theoretical hypotheses about the determinants of FDI location in a panel data regression framework. The results of the estimation of a gravity model lend support to the proximity-concentration and internalization hypotheses. Also, the fact that FDI has been found to be decreasing in the competition posed by alternative locations is suggestive of the superiority of the competing-destinations version of the gravity equation over its classical formulation.

Mots clés: Social Sciences & Humanities

Felipa de Mello-Sampayo. Competing-Destinations Gravity Model: An Application to the Geographic Distribution of FDI. Applied Economics, 2009, 41 (17), pp.2237-2253. ⟨10.1080/00036840701765346⟩. ⟨hal-00582176⟩