Chapter 1 builds a three-country version of the Footloose Capital model with asymmetric trade costs and offers a revised definition of the home market effect (HME) valid in a multi-country setting. It demonstrates under which conditions access to foreign markets is important and how changes in trade costs shape industrial location

Chapter 2 derives an empirical specification of the HME and estimates the evolution of manufacturing production across European Union countries. The HME is found in eleven industries. The results emphasize the importance of countries' access to foreign markets

Chapter 3 blends offshoring with a Melitz-style model. It shows that offshoring is predominantly done by large, most efficient firms. Offshoring reduces per-firm labour demand is smaller firms of the offshoring nation, but has ambiguous effects in larger firms and the overall sector employment. Freer trade is a necessary condition to ensure an increase in sector's employment when offshoring occurs