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Regional foreign direct investment in manufacturing. Do agglomeration economies matter?

Author

Listed:
  • Àngels Pelegrín

    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

  • Catalina Bolancé

    (RFA-IREA; Universitat de Barcelona (UB))

Abstract

This paper examines the role played by agglomeration economies as location determinants of regional foreign direct investment in manufacturing. The analysis reveals that foreign direct investment location is dependent on specific industry traits, and that agglomeration economies appear as the strongest pull factors. The model, estimated with panel data, finds evidence, first, that industries with a high level of linkages are attracted to regions with high manufacturing activity; and, second, that locations which accumulate R+D activities attract high-tech industries. Finally, one cost-oriented industry was found not to value agglomeration economies, being attracted instead to regions with low salary levels.

Suggested Citation

  • Àngels Pelegrín & Catalina Bolancé, 2006. "Regional foreign direct investment in manufacturing. Do agglomeration economies matter?," Working Papers 2006/2, Institut d'Economia de Barcelona (IEB).
    • Handle: RePEc:ieb:wpaper:doc2006-2
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Agglomeration economies; Foreign direct investment; Industry traits; Panel data; Regional manufacturing location;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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