Transportation cost and the geography of foreign investment

Laura Alfaro and Maggie Chen

Chapter 12 in Handbook of International Trade and Transportation, 2018, pp 369-406 from Edward Elgar Publishing

Abstract: Falling transportation costs and rapid technological progress have precipitated an explosion of cross-border flows in goods, services, investments, and ideas led by multinational firms. This chapter reviews existing theories and evidence, addressing questions including: How is FDI distributed across space? Why does the law of gravity apply? How do the costs of transporting goods, tasks, and technologies influence firms’ decisions to separate tasks geographically and locate relative to one another? The authors discuss a variety of theoretical mechanisms through which transport cost and other geographic friction influence FDI and present the key empirical studies and findings.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (7)

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Working Paper: Transportation Cost and the Geography of Foreign Investment (2017)
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