Location choices of multinational firms in Europe: the role of national boundaries and EU policy

Roberto Basile (), Davide Castellani and Antonello Zanfei

ERSA conference papers from European Regional Science Association

Abstract: We examine the determinants of multinational firmsÂ’ location choices in Europe by estimating a nested logit model on a data-set of 5,761 foreign subsidiaries established in 55 regions in 8 EU countries over the period 1991-1999. We find that firms perceive regions across different countries as more similar than regions within national borders. This might be revealing that the process of European integration has reduced the national specificities perceived by multinationals and that regions within Europe compete to attract FDIs more across than within countries. Controlling for regional market size and potential, agglomeration economies and labor markets conditions, we also find that EU regional policy, captured by Cohesion Funds and Objective 1 eligibility, played a significant role in attracting multinationals, thus mitigating the agglomeration forces at work. Differences emerge in determinants of EU and US multinationals location choices, with special reference to the role of labor markets.

Date: 2004-08
New Economics Papers: this item is included in nep-dcm, nep-eec and nep-geo
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Related works:
Working Paper: Location Choices of Multinational Firms in Europe: the Role of National Bourdaries and EU Policy (2003)
Working Paper: Location choices of multinational firms in Europe: the role of national boundaries and EU policy (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa04p37

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