Does the location of company headquarters affect regional GDP?

Advances in interregional databases, driven by globalisation of the economy, enable a more in-depth analysis of trade flows. It should be borne in mind that a better understanding of interregional trade flows would contribute to more appropriate economic policy decisions. One of the objectives of this paper is to propose and apply a method to obtain the interregional flows that allows each region to be characterised based on its dependence, and the orientation and intensity of the flows. The ultimate objective is to test whether the location of the headquarters of companies affects the calculation of regional macromagnitudes. To this end, using different gravity models, we assess whether geographical factors influence the intensity of trade flows. This study uses European regional data, provided by the EUREGIO database, and focuses on Spanish regions. Our results show that factors such as inertia, the border effect and the headquarters effect of companies determine trade flows between the regions of Spain.