Agglomeration, regional grants and firm location

Michael P. Devereux (), Rachel Griffith () and Helen Simpson

No W04/06, IFS Working Papers from Institute for Fiscal Studies

Abstract: We examine whether discretionary government grants influence the location of new plants, and how effective these incentives are in the presence of agglomeration and urbanisation externalities. We find evidence that regional industrial structure affects the location of new entrants. Firms in more agglomerated industries locate new plants near to others in the same industry. Firms are also attracted to industrially diversified locations. Foreign multinationals locate new plants near to other foreign-owned plants in the same industry. Fiscal incentives in the form of grants are found to have some effect in attracting plants to specific geographic areas eligible for such aid.

Keywords: Corporation; tax (search for similar items in EconPapers)
JEL-codes: R12 R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-reg and nep-ure
Date: 2004-03
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