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The location of domestic and foreign production affiliates by French multinational firms

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  • Thierry Mayer

    (Département d'économie)

  • Isabelle Méjean

    (Department of Economics)

  • Benjamin Nefussi

    (Ecole des Hautes Etudes en Sciences Sociales (EHESS))

Abstract

In this paper we combine two traditions in the analysis of firms’ location patterns. One led by trade economists who try to understand why do firms invest abroad, and another one led by urban/regional economists, who frequently use patterns of inter-regional or inter-city choices to estimate agglomeration economies. We contribute to the trade-motivated set of papers on location choices by adding the domestic country in the choice set, while accounting for firm’s heterogeneity in the choices. Our econometric results using French firm-level data show an important ‘‘home bias” in manufacturing investment decisions. A crucial finding, which bridges with our contribution to the agglomeration literature, is that the spatial clustering of affiliates belonging to the same industrial group accounts for the lion’s share of this home bias.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/c8dmi8nm4pdjkuc9g8mcgcdbi.

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Date of creation: 2010
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Publication status: Published in Journal of Urban Economics, 2010, vol. 68, pp.115-128
Handle: RePEc:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mcgcdbi

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Citations

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Cited by:
  1. 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.
  2. 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).
  3. 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.
  4. 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.
  5. Chen, Maggie Xiaoyang & Moore, Michael, 2009. "Location decision of heterogeneous multinational firms," MPRA Paper 33482, University Library of Munich, Germany.
  6. 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.
  7. 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.
  8. Alexandre Gazaniol, 2012. "The location choices of multinational firms : the role of internationalization experience and group affiliation," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2012/02, DIAL (Développement, Institutions et Mondialisation).
  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. 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).
  11. 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).
  12. 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).
  13. 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.
  14. Andrea Gauselmann & Philipp Marek, 2011. "Regional Determinants of MNE's Location Choice in Transition Economies," WIFO Working Papers, WIFO 412, WIFO.
  15. 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.
  16. 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.
  17. Franz-Josef Bade & Eckhardt Bode & Eleonora Cutrini, 2012. "Spatial fragmentation of industries by functions," Working Papers, Macerata University, Department of Studies on Economic Development (DiSSE) 39-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised Feb 2012.
  18. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
  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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