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Bjorvatn, Kjetil; Eckel, Carsten (2004): Policy competition for foreign direct investment between asymmetric countries. Discussion paper / Norwegian School of Economics and Business Administration, Department of Economics, 19/04
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The present paper analyses policy competition for foreign direct investment between a larger and industrially more developed country and a smaller and industrially less developed country. We demonstrate how policy competition affects the location decision of the foreign investor and derive welfare implications. The key variables in our analysis are intra-regional trade costs, differences in market size, and minimum wages.

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