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Regional foreign direct investment in manufacturing. Do agglomeration economies matter?

[journal article]

Pelegrín, Angels; Bolancé, Catalina

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Abstract This paper examines the role played by agglomeration economies as location determinants of regional foreign direct investment in manufacturing. The analysis reveals that foreign direct investment location is dependent on specific industry traits, and that agglomeration economies appear as the strongest pull factors. The model, estimated with panel data, finds evidence, first, that industries with a high level of linkages are attracted to regions with high manufacturing activity; and, second, that locations which accumulate R+D activities attract chemical industries. Finally, cost-oriented industries do not value agglomeration economies and their localization emerges due to endowment reasons.
Classification Political Economy; Economic Policy; Area Development Planning, Regional Research
Free Keywords agglomeration economies; foreign investment; regional location
Document language English
Publication Year 2008
Page/Pages p. 505-522
Journal Regional Studies, 42 (2008) 4
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)