Theoretical Model

Hanna Makhavikova
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Hanna Makhavikova: Otto-von-Guericke University Magdeburg

Chapter Chapter 3 in Determinants of FDI in Central and Eastern Europe, 2018, pp 81-132 from Springer

Abstract: Abstract This chapter considers the theoretical framework. We started by considering the basic model offered by Neary (Manchester School 70(3):291–314, 2002) which studies location choices in homogenous countries, and examined three scenarios: equal external and internal trade barriers, regional preferential trade agreements, and zero trading costs between member countries. Further, we implemented these three scenarios for heterogeneous countries with different market sizes, external tariffs, labour and installation costs and analysed how changed market characteristics influence the previous findings. Finally, we derived a FDI model.

Keywords: Trade Costs; Intra-regional Trade Barriers; Installation Costs; Production Cost Differentials; Regional Integration Agreements (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-319-91878-5_3

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DOI: 10.1007/978-3-319-91878-5_3

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