Agglomeration in the Geographical Location of Swedish MNFs

Until recently, locational analysis in international economics was mainly carried out by applying John Dunning’s so called eclectic - or OLI - approach.1 Dunning’s contribution (1977) was to provide a taxonomy that related micro- and macroeconomic variables in a consistent way to the pattern of foreign direct investment (FDI). However, as shown in the preceding chapters, the substantial theoretical advances made in the last decade enables the location of economic activities to be modelled as an endogenous process (Krugman, 1991; Brainard, 1993, 1997; Venables, 1996; Markusen, 1995).