Theoretical Model

  • Hanna Makhavikova
Part of the Contributions to Economics book series (CE)


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.


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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Hanna Makhavikova
    • 1
  1. 1.Faculty of Economics and ManagementOtto-von-Guericke University MagdeburgMagdeburgGermany

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