Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/2603
Authors: 
Barrios Cobos, Salvador
Görg, Holger
Strobl, Eric
Year of Publication: 
2001
Series/Report no.: 
CEPR Discussion Paper Series, Centre for Economic Policy Research (CEPR), London 2827
Abstract: 
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 and address the properties of empirical measures to proxy displacement of national by multinational firms between two countries. These empirical measures are then used to test the convergence hypothesis for a panel of data of country pairs over the years 1985–96. Our results provide some empirical support for the convergence hypothesis.
JEL: 
F21
F23
Document Type: 
Working Paper

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