Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania

Christian Hilber and Ioan Voicu

MPRA Paper from University Library of Munich, Germany

Abstract: Relatively little is known about the determinants of FDI location in transition economies. We exploit the large inflow of FDI into Romania, after the revolution in 1989, to study this question. Using a conditional logit setup, we find that external economies from service agglomeration are the main determinant of FDI-location. An increase in service employment density by 10 percent makes the average Romanian county 11.9 percent more likely to attract a foreign investor. Industry specific foreign and domestic agglomeration economies and labor conflicts also impact FDI-location. Our findings imply that results are sensitive to the inclusion of locational fixed effects.

Keywords: Agglomeration economies; foreign direct investment; transition economies (search for similar items in EconPapers)
JEL-codes: P33 R3 (search for similar items in EconPapers)
Date: 2007-09-30
New Economics Papers: this item is included in nep-geo, nep-ifn and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Journal Article: Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5137

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