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The Location of Domestic and Foreign Production Affiliates by French Multinational Firms

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  • Mayer, Thierry
  • Méjean, Isabelle
  • Nefussi, Benjamin

Abstract

Economists explaining location choices of foreign affiliates usually focus on country-level determinants. Costs of production, the size of expected demand, proxies for agglomeration effects, and various policy-related incentives form the usual set of covariates. Two dimensions of those choices are usually omitted. Multinational enterprises (MNEs) usually have more than one affiliate abroad and they also continue to invest domestically during their international expansion. We add to the literature on location choice by accounting for i) the entire network of affiliates of each French MNE over the 1992-2002 period, and ii) the entire set of possible choices by including the home country. Our results show that the interdependence between affiliates of the same MNE matters a great deal for location, both for the choice between different foreign countries and for the choice between investing at home or abroad. Moreover, French firms' propensity to invest abroad is shown to be positively linked to their productivity and the size of their intangible assets.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6308.

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Date of creation: May 2007
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Handle: RePEc:cpr:ceprdp:6308

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Keywords: conditional logit model; location choice; multinational firms;

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Citations

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Cited by:
  1. Andrea Gauselmann & Philipp Marek, 2011. "Regional Determinants of MNE's Location Choice in Transition Economies," WIFO Working Papers, WIFO 412, WIFO.
  2. Valentina Meliciani & davide castellani & loredana mirra, 2013. "The Determinants Of Inward Foreign Direct Investment In Business Services Across European Regions," ERSA conference papers ersa13p861, European Regional Science Association.
  3. 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).
  4. Chen, Maggie Xiaoyang & Moore, Michael, 2009. "Location decision of heterogeneous multinational firms," MPRA Paper 33482, University Library of Munich, Germany.
  5. Nobuaki Yamashita & Toshiyuki Matsuura & Kentaro Nakajima, 2014. "Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China," AJRC Working Papers, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University 1401, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  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. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
  8. 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.
  9. Inui, Tomohiko & Matsuura, Toshiyuki & Pocet, Sandra, 2008. "The Location of Japanese MNCs Affiliates: Agglomeration Spillovers and Firm Heterogeneity," Discussion Paper Series, Institute of Economic Research, Hitotsubashi University a506, Institute of Economic Research, Hitotsubashi University.
  10. Alexandre Gazaniol, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Working Papers DT/2012/02, DIAL (Développement, Institutions et Mondialisation).
  11. 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.
  12. 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.
  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. 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).
  15. Franz-Josef Bade & Eckhardt Bode & Eleonora Cutrini, 2012. "Spatial fragmentation of industries by functions," Working Papers 39-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised Feb 2012.
  16. 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).
  17. Gazaniol, Alexandre, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Economics Papers from University Paris Dauphine 123456789/9018, Paris Dauphine University.
  18. 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.
  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 ersa13p566, European Regional Science Association.

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