Location Clusters, FDI and Local Entrepreneurs: Consistent Public Policy
Joao Faria ()
Journal of the Knowledge Economy, 2016, vol. 7, issue 4, 858-868
Abstract In order to formulate public policy consistent with attracting foreign investment and fostering regional development, this paper analyzes a model of local entrepreneur’s choices when they are affected by foreign direct investment (FDI) spillovers. FDI is determined by economies of agglomeration, market size, taxes, labor, and location costs. It is shown that location costs of the multinationals (MNE) affect the optimal quantity of MNE capital and regional development, while location costs and preferences of local entrepreneurs affect only their location and consumption. Other determinants of MNE location also impact regional development. The main policies advocated are as follows: provision of logistical infrastructure; creation and/or nurturing of pro-market institutions; non-discretionary policies; reduction of statutory tax rate; incentives to universities and research centers.
Keywords: Multinationals; Regional policy; Spillovers (search for similar items in EconPapers)
JEL-codes: F23 F43 R3 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s13132-015-0272-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jknowl:v:7:y:2016:i:4:d:10.1007_s13132-015-0272-5
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of the Knowledge Economy is currently edited by Elias G. Carayannis
More articles in Journal of the Knowledge Economy from Springer, Portland International Center for Management of Engineering and Technology (PICMET)
Bibliographic data for series maintained by Sonal Shukla ().