Trade in intermediate goods as one possible link between rising trade and foreign direct investment is examined. To … explain growing intermediate goods trade, three hypotheses are brought forward: outsourcing, global sourcing and the … reason of growing trade in intermediate goods in the cross-section and the time-series framework. The evidence for …

activities of German multinationals. Proximity-concentration theory which we derive our model from shows that firms face a trade …. Firms facing this trade-off choose between export and foreign production according to their expected profits. The model is …-concentration trade-off. In particular, market size and distance affect positively the probability of foreign production whereas fixed …