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Location Determinants of Greenfield Foreign Investments in the Enlarged Europe: Evidence from a Spatial Autoregressive Negative Binomial Additive Model

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Author Info

  • Roberto Basile

    ()
    (Institute for Studies and Economic Analysis, Rome)

  • Luigi Benfratello

    ()
    (Department of Economics and Public Finance "G. Prato", University of Torino)

  • Davide Castellani

    ()
    (Department of Economics, Finance and Statistics, University of Perugia)

Abstract

This paper addresses two important methodological issues in the analysis of industrial location: spatial dependence and nonlinearities. To this end, we estimate a semi-parametric spatial autoregressive negative binomial model using data on the number of inward greenfield FDI occurred over the 2003-2007 period in 249 European regions. Results support the view that multinational firms’ location choices are very spatially dependent, even controlling for a large number of regional characteristics. A spatial lag model with a non-parametric spatial filter allows us to purge the residuals from spatial dependence and yields sensible changes in the magnitude of some estimated coefficients. We also provide robust evidence of nonlinearities. In particular, we find that the effect of agglomeration economies fades down as the density of economic activities reaches some limit value.

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File URL: http://web.econ.unito.it/prato/papers/n10.pdf
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Bibliographic Info

Paper provided by Former Department of Economics and Public Finance "G. Prato", University of Torino in its series Working papers with number 10.

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Length: 40 pages
Date of creation: Mar 2010
Date of revision:
Handle: RePEc:tur:wpaper:10

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Keywords: Multinational firms; greenfield FDI; count data; spatial econometrics; semiparametric econometrics;

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References

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Cited by:
  1. Liviano Solís, Daniel & Arauzo Carod, Josep Maria, 2011. "Industrial Location and Space: New Insights," Working Papers 2072/152137, Universitat Rovira i Virgili, Department of Economics.
  2. Liesenfeld, Roman & Richard, Jean-François & Vogler, Jan, 2013. "Analysis of discrete dependent variable models with spatial correlation," Economics Working Papers 2013-01, Christian-Albrechts-University of Kiel, Department of Economics.

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