Spatial tax regimes and location choices of manufacturing firms: Survey evidence in southern Tunisia

Rawaa Laajimi

Review of Development Economics, 2024, vol. 28, issue 3, 803-826

Abstract: We conducted a survey of 179 manufacturing firms in southeastern Tunisia to investigate the determinants of their location choices, with a specific focus on the role of place‐based fiscal regimes. The data analyzed using Multiple Factor Analysis and Hierarchical Cluster Analysis reveal that manufacturing firms in this region can be categorized into distinct groups based on the relative strength of the wide range of location determinants included in the survey. While we confirm the significant role of fiscal and financial incentives in the location decisions of some manufacturing firms, we also highlight the relevance of traditional factors such as workforce, land availability and geographic proximity for certain sectors. Estimates from binary and ordered probit models show that, overall, the probability of locating in a tax‐advantaged area increases by an average 15% compared with a non‐tax‐advantaged area.

Date: 2024
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