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References Anderson , J. E. ( 1979 ): A theoretical foundation for the gravity equation . American Economic Review 69 ( 1 ): 106 – 116

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is the error. 4 Methodology and data Using a standard OLS approach when estimating the gravity equation for FDI usually leads to biased results. This is due to some features of the data used. Firstly

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-Cost Effects Using the Gravity Equation . Journal of International Economics , 77 ( 1 ): 77 – 85 . Baier , S.L. — Bergstrand , J.H. ( 2010 ): Approximating General Equilibrium Impacts

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Theoretical Foundation for the Gravity Equation . The American Economic Review , 69 ( 1 ): 106 – 116 . Anderson , J. E. ( 2011 ): The Gravity Model . Annual Review of

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Review of Economics & Business , 14 ( 2 ): 51 – 69 . Bergstrand , J.H. ( 1989 ): The Generalized Gravity Equation, Monopolistic Competition, and the Factor

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Foundation for the Gravity Equation . American Economic Review , 69 ( 1 ): 106 – 116 . Anderson , J. E. ( 2010 ): The Gravity Model . Working Paper, No. 16576, National

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