In the paper, we test the effect of local development, regional and local policies on the location decisions and productivity of firms. Development indicators include local research and development activity or education while policy decisions used in this study encompass for example tax rates, investment incentives or road construction. The study builds upon a large national panel of firms. Importantly, such a rich dataset has rarely been employed for productivity and location choice exercises. The paper is composed of two sections dealing with location choice and productivity, respectively and we compare the effect of variables used in both sections. Among others, we find that density of road network positively influenced location choice and productivity as well, while a somewhat larger size of administration helps new firms to settle but later on, it has no effect on productivity.
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Paper provided by Institute of Economics, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number
0504.
Find related papers by JEL classification: R3 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity H7 - Public Economics - - State and Local Government; Intergovernmental Relations C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
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