Review of the Literature on Determinants of the Locational Attractiveness of Regions

The aim of this chapter is to review the literature devoted to factors which attract or discourage entrepreneurs to invest in different locations. The first part of the chapter presents different concepts and definitions of regions. This is followed by a presentation of the classic theories concerning the location of business activities in regions, ranging from Hume and Weber through Marshall, Alonso, Chinitz, Tiebout, Isard, Perroux and Lösch, and concluding with Myrdal, Kaldor and Hoover. Then the chapter focuses crucially on different concepts of modern location factors. This leads to an examination of the theory of agglomeration economies, as developed by Krugman and others, including Castells’ space of flows. Moreover transport infrastructure and issues concerning other factors of production, including innovations and new technologies as well as labour market issues are also discussed. The last part of the chapter is dedicated to institutional aspects and behavioural perspectives, which are of great importance to entrepreneurs seeking optimal investment locations. The text is a review of the literature of distinguished researchers, supplemented by some of the author’s own critical remarks and opinions. In order to ensure clarity, thematic unity, precision and correct presentation of various approaches to the location of industries, the chapter has been prepared using original statements, phrases and combinations of words from over 100 original publications (articles in journals and chapters in books).