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Market familiarity and the location of South and North MNEs

Azémar, Céline and Darby, Julia and Desbordes, Rodolphe and Wooton, Ian (2012) Market familiarity and the location of South and North MNEs. Economics and Politics, 24 (3). pp. 307-345. ISSN 0954-1985

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Abstract

We use a systematic empirical analysis of the determinants of South-South (SS) and North-South (NS) foreign direct investment (FDI) as a canvas to explore how multinational enterprises’ (MNEs) location decisions are shaped by better acquaintance with a foreign market resulting from bilateral ties, experience of international expansion, and knowledge of how to deal with poor governance. We find that these various aspects of market familiarity, which can interact together, are important to explain and differentiate the location behaviors of South MNEs (S-MNEs) and North MNEs (N-MNEs) in developing countries.