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The location of domestic and foreign production affiliates by French multinational firms

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  • Mayer, T.
  • Mejean, I.
  • Nefussi, B.

Abstract

In this paper we combine two traditions in the analysis of firms' location patterns. One led by trade economists who try to understand why do firms invest abroad, and another one led by urban/regional economists, who frequently use patterns of inter-regional or inter-city choices to estimate agglomeration economies. We contribute to the trade-motivated set of papers on location choices by adding the domestic country in the choice set, while accounting for firm's heterogeneity in the choices. Our econometric results using French firm-level data show an important "home bias" in manufacturing investment decisions. A crucial finding, which bridges with our contribution to the agglomeration literature, is that the spatial clustering of affiliates belonging to the same industrial group accounts for the lion's share of this home bias.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 68 (2010)
Issue (Month): 2 (September)
Pages: 115-128

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Handle: RePEc:eee:juecon:v:68:y:2010:i:2:p:115-128

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Location choice Multinational firms Agglomeration economies Conditional logit model;

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References

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Citations

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Cited by:
  1. Davide CASTELLANI & Valentina MELICIANI & Loredana Mirra, 2012. "The determinants of inward foreign direct investment in business services across european regions," Quaderni del Dipartimento di Economia, Finanza e Statistica, Università di Perugia, Dipartimento Economia, Finanza e Statistica 104/2012, Università di Perugia, Dipartimento Economia, Finanza e Statistica.
  2. Chen, Maggie Xiaoyang & Moore, Michael O., 2010. "Location decision of heterogeneous multinational firms," Journal of International Economics, Elsevier, Elsevier, vol. 80(2), pages 188-199, March.
  3. Nobuaki Yamashita & Toshiyuki Matsuura & Kentaro Nakajima, 2014. "Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2014-08, The Australian National University, Arndt-Corden Department of Economics.
  4. Siedschlag, Iulia & Zhang, Xiaoheng & Smith, Donal, 2009. "What Determines the Location Choice of Multinational Firms in the ICT Sector?," Papers, Economic and Social Research Institute (ESRI) WP336, Economic and Social Research Institute (ESRI).
  5. Vivien Procher, 2009. "Agglomeration Effects and the Location of Foreign Direct Investment – Evidence from French First-time Movers," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0100, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. Siedschlag, Iulia & Smith, Donal & Turcu, Camelia & Zhang, Xiaoheng, 2009. "What Determines the Attractiveness of the European Union to the Location of R&D Multinational Firms?," Papers, Economic and Social Research Institute (ESRI) WP306, Economic and Social Research Institute (ESRI).
  7. Franz-Josef Bade & Eckhardt Bode & Eleonora Cutrini, 2012. "Spatial fragmentation of industries by functions," Working Papers, Macerata University, Department of Studies on Economic Development (DiSSE) 39-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised Feb 2012.
  8. Tomohiko Inui & Toshiyuki Matsuura & Sandra Poncet, 2008. "The Location of Japanese MNC Affiliates: Agglomeration, Spillovers and Firm Heterogeneity," Working Papers, CEPII research center 2008-24, CEPII research center.
  9. Siedschlag, Iulia & Zhang, Xiaoheng & Smith, Donal, 2009. "What Determines the Attractiveness of EU Regions to the Location of Multinational Firms in the ICT Sector?," Papers, Economic and Social Research Institute (ESRI) DYNREG45, Economic and Social Research Institute (ESRI).
  10. Andrea Gauselmann & Philipp Marek, 2011. "Regional Determinants of MNE's Location Choice in Transition Economies," WIFO Working Papers, WIFO 412, WIFO.
  11. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series, The World Bank 6062, The World Bank.
  12. Andrea Gauselmann & Philipp Marek & J. P. Angenendt, 2011. "MNE’s Regional Location Choice - A Comparative Perspective on East Germany, the Czech Republic and Poland," IWH Discussion Papers, Halle Institute for Economic Research 8, Halle Institute for Economic Research.
  13. Vivien Procher, 2011. "Agglomeration effects and the location of FDI: evidence from French first-time movers," The Annals of Regional Science, Springer, Springer, vol. 46(2), pages 295-312, April.
  14. Gazaniol, Alexandre, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Economics Papers from University Paris Dauphine, Paris Dauphine University 123456789/9018, Paris Dauphine University.
  15. Andrea Gauselmann & Philipp Marek, 2012. "Regional determinants of MNE’s location choice in post-transition economies," Empirica, Springer, Springer, vol. 39(4), pages 487-511, November.
  16. Vincent Delbecque & Isabelle Méjean & Lise Patureau, 2014. "Labor market institutions and firms’ location choices," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 150(1), pages 115-148, February.
  17. Hayakawa, Kazunobu & Tsubota, Kenmei, 2011. "Location choice in low-income countries : evidence from Japanese investments in East Asia," IDE Discussion Papers, Institute of Developing Economies, Japan External Trade Organization(JETRO) 301, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  18. Alexandre Gazaniol, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2012/02, DIAL (Développement, Institutions et Mondialisation).
  19. Corentin Trevien & Thierry Mayer, 2013. "Urban Public Transportation and Firm Location Choice Evidence from the Regional Express Rail of Paris Metropolitan area," ERSA conference papers, European Regional Science Association ersa13p566, European Regional Science Association.

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