Haque, M. Emranul; Mukherjee, Arijit; Senalp, Burcu - 2017
Although empirical evidence shows that a lower trade cost and higher FDI may go hand in hand, the well-known "proximity …-concentration" hypothesis does not support this view. We provide a simple explanation for this phenomenon. We show that a lower trade cost on … the intermediate goods (with or without a trade cost reduction on the final goods) increases the incentive for FDI in the …