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What Determines the Attractiveness of the European Union to the Location R&D Multinational Firms?

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Author Info
Siedschlag, Iulia (ESRI)
Smith, Donal (ESRI)
Turcu, Camelia
Zhang, Xiaoheng (ESRI)

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Abstract

We analyse 446 location decisions of foreign affiliates in the R&D sector incorporated in the European Union over 1999-2006. Our results suggest that on average, the location probability increases with the size of demand, agglomeration economies, low production cost, technological development, flexibility of labour markets, access to skilled labour and information technology infrastructure. Our evidence suggests that after controlling for the R&D intensity of regions, European Union's regional policy and country level tax differences have had no significant effects in fostering the attractiveness of regions to R&D foreign investment. We find evidence of geographical structures relevant for the location choice of R&D multinational firms across the European Union. Further, we find that European investors have responded differently to location characteristics in comparison to North American investors.

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Publisher Info
Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number DYNREG46.

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Length: 36 pages
Date of creation: 2009
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Handle: RePEc:esr:wpaper:dynreg46

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Related research
Keywords: Foreign direct investment; Internationalisation of R&D; Location choice; Conditional logit; Nested logit; European Union;

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