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International Relocation Of Production: Where Do Firms Go?

Author

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  • Leo Sleuwaegen
  • Enrico Pennings

Abstract

The flexible relocation of capacity across countries by multinational enterprises has become an important source of concern. Using a unique sample of relocating firms in Belgium, we find that wages and market potential of host regions are important determinants for the location choice. Considering firm characteristics, we show that large firms have a higher propensity to relocate to remote countries. Public aid only plays a decisive role in the investment decision for relocations to adjacent countries, suggesting a potential harmful role in distorting competition. More proactive policies in line with changing comparative location advantages should be implemented to accommodate relocations.

Suggested Citation

  • Leo Sleuwaegen & Enrico Pennings, 2006. "International Relocation Of Production: Where Do Firms Go?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(4), pages 430-446, September.
    • Handle: RePEc:bla:scotjp:v:53:y:2006:i:4:p:430-446
    DOI: 10.1111/j.1467-9485.2006.00388.x
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    Cited by:

    1. Federica Rossi & Magdalena Dej, 2020. "Where do firms relocate? Location optimisation within and between Polish metropolitan areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(3), pages 615-640, June.
    2. Manuel Artis & Raul Ramos & Jordi Suriñach, 2006. "Job losses, outsourcing and relocation, empirical evidence using microdata," IREA Working Papers 200601, University of Barcelona, Research Institute of Applied Economics, revised Dec 2006.
    3. Jan Ženka, 2009. "Delokalizace zpracovatelského průmyslu ČR (komponentní analýza) [Delocalization of czech manufacturing: which branches of manufacturing are threatened by relocation abroad?]," Politická ekonomie, Prague University of Economics and Business, vol. 2009(1), pages 79-93.
    4. Lampón, Jesús F. & Lago-Peñas, Santiago, 2013. "Factors behind international relocation and changes in production geography in the European automobile components industry," MPRA Paper 45659, University Library of Munich, Germany.
    5. Silvia Rocha‐Akis & Ronnie Schöb, 2011. "Welfare Policy in the Presence of Unionised Labour and Internationally Mobile Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 93-119, March.
    6. Jesús F. Lampón & Santiago Lago-Peñas & Pablo Cabanelas, 2016. "Can the periphery achieve core? The case of the automobile components industry in Spain," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 595-612, August.
    7. Jesús F. Lampón & Pablo Cabanelas-Lorenzo & Santiago Lago-Peñas, 2013. "Why firms relocate their production overseas? The answer lies inside: corporate, logistic and technological determinants," Working Papers 2013/3, Institut d'Economia de Barcelona (IEB).
    8. Jesús F. Lampón & Pablo Cabanelas-Lorenzo & Santiago Lago-Peñas, 2013. "Why firms relocate their production overseas? The answer lies inside: corporate, logistic and technological determinants," Working Papers 2013/3, Institut d'Economia de Barcelona (IEB).
    9. Dewit, Gerda & Görg, Holger & Temouri, Yama, 2019. "Employment Protection and Firm Relocation: Theory and Evidence," Open Access Publications from Kiel Institute for the World Economy 265098, Kiel Institute for the World Economy (IfW Kiel).
    10. Deschryvere, Matthias, 2009. "Mobility of Corporate Headquarter Functions: A Literature Review," Discussion Papers 1203, The Research Institute of the Finnish Economy.
    11. Dario Musolino & Ilaria Mariotti & Aleid E. Brouwer, 2020. "Stated and revealed locational preferences of firms: a national scale perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(3), pages 493-499, June.
    12. Fernando Merino, 2017. "Offshoring, outsourcing and the economic geography of Europe," Papers in Regional Science, Wiley Blackwell, vol. 96(2), pages 299-323, June.
    13. Gerda Dewit & Holger Görg & Yama Temouri, 2019. "Employment Protection and Firm Relocation: Theory and Evidence," Economica, London School of Economics and Political Science, vol. 86(344), pages 663-688, October.
    14. Javier Bilbao-Ubillos & Vicente Camino-Beldarrain, 2008. "Proximity Matters? European Union Enlargement and Relocation of Activities," Economic Development Quarterly, , vol. 22(2), pages 149-166, May.
    15. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2018. "Technology diffusion, international integration and participation in developing economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 15(1), pages 215-253, January.
    16. Lampón, Jesús F., 2019. "Relocation in conditions of uncertainty: the Spanish automobile components industry during the economic crisis (2008-2012)," MPRA Paper 92738, University Library of Munich, Germany.
    17. Cheung, Cherry & Coucke, Kristien & Neicu, Daniel, 2011. "A Decision Tree as a Quick Scan for Effective Market Functioning," Working Papers 2011/06, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    18. Jesús F. Lampón, 2020. "The impact of uncertainty on production relocation: Implications from a regional perspective," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 427-446, June.
    19. Lampón, Jesús F. & Cabanelas, Pablo & Carballo-Cruz, Francisco, 2017. "A model for international production relocation: Multinationals' operational flexibility and requirements at production plant level," Journal of Business Research, Elsevier, vol. 77(C), pages 95-101.
    20. Martine Boutary & Marie-Christine Longe Monnoyer, 2014. "PME et délocalisation : regards sur les deux rives. Aspects théoriques," Post-Print hal-02548765, HAL.
    21. Lampón, Jesús F. & Lago-Peñas, Santiago, 2013. "Factors behind international relocation and changes in production geography in the European automobile components industry," MPRA Paper 45659, University Library of Munich, Germany.
    22. Fodouop Kouam Arthur William, 2024. "Navigating the Relocation Trend: The Rising Shift of Multinational Corporations from China to Other Countries," International Journal of Science and Business, IJSAB International, vol. 34(1), pages 62-75.
    23. Jan Ženka & Vladislav Čadil, 2009. "Regional distribution of technology-intensive manufacturing industries in the czech republic with an accent on risk of delocalisation," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(1), pages 61-77.

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