Agglomeration and FDI: Bringing International Production Linkages into the Picture

Roman Stöllinger
Authors registered in the RePEc Author Service: Sebastian Leitner

No 121, wiiw Working Papers from The Vienna Institute for International Economic Studies, wiiw

Abstract: Abstract The attractiveness of a country for foreign direct investors stems from domestic factors but also from its interconnectedness with the global economy. While knowledge spillovers and domestic inter-industry linkages have been examined by the literature on FDI location, international linkages have been neglected due to data constraints. Using global input-output data, this paper investigates the role of backward and forward production linkages between countries for location choices of first-time greenfield FDI investors in the EU along with traditional agglomeration forces. In line with the literature it is found that firms tend to co-locate with other firms from the same country and industry. Most importantly, inter-industry linkages between the source and the host country emerge as an important attraction factor while the same does not hold for domestic inter-industry linkages.

Keywords: foreign direct investment; multinational enterprises; location choice; agglomeration; international linkages (search for similar items in EconPapers)
JEL-codes: F21 F23 R30 (search for similar items in EconPapers)
Pages: 42 pages including 9 Tables and 4 Figures
Date: 2015-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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