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Attracting Foreign Investments in Europe - are Italian Regions Doomed?

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  • Roberto Basile

    ()

  • Luigi Benfratello

    ()

  • Davide Castellani

    ()

Abstract

Foreign direct investments in Europe have grown substantially over the last decade, but Italian regions account for a very small portion of such increase. Why does Italian regions attract such a low number of foreign investors? Is it a regional or a country problem? One explanation for this pattern could be that the characteristics of Italian regions are not attractive to foreign multinationals. A different, although not alternative, explanation is that Italian regions may be ‘doomed’ by the fact that they all share common national policies and institutions (such as, tax regimes, efficiency of bureaucracy, degree of labour market regulation and effectiveness of the legal and property right protection system) which discourage foreign firms to locate their plants in Italy. This view follows a tradition of cross-country studies which have addressed the role of institutional and policy characteristics as determinants of inward FDIs. In this paper we will model the potential attractiveness of 52 NUTS1 regions in 5 EU countries in terms of their main observable characteristics and will investigate whether Italian regions attract more or less than their potential. In other words, we will ask whether a EU region with the same characteristics of an Italian region will attract a different amount of FDIs. Second, we will evaluate the impact of some national policy and institutional characteristics on the attractiveness of regions and we will assess the role of such factors in explaining the Italian specificity. Third, we will simulate the relative contribution to FDIs in Italian regions of regional and national variables. This exercise will help us assessing to what extent the low attractiveness of Italian regions is the result of specific regional characteristics or of countrywide factors.

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Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa05p148.

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Date of creation: Aug 2005
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Handle: RePEc:wiw:wiwrsa:ersa05p148

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Citations

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Cited by:
  1. Radhuber, Michael, 2007. "Crescita Economica o Sviluppo Civile? Altre Vie per il Mezzogiorno," MPRA Paper 8037, University Library of Munich, Germany, revised Apr 2008.
  2. Vittorio Daniele & Ugo Marani, 2008. "Organized Crime and Foreign Direct Investment: The Italian Case," CESifo Working Paper Series, CESifo Group Munich 2416, CESifo Group Munich.
  3. Anna Maria Ferragina & Fernanda Mazzotta & Erol Taymaz & Kamil Yilmaz, 2013. "The Impact Of Fdi On Firm Survival And Employment: A Comparative Analysis For Turkey And Italy," ERSA conference papers, European Regional Science Association ersa13p1211, European Regional Science Association.
  4. Daniele, Vittorio, 2007. "Criminalità e investimenti esteri. Un’analisi per le province italiane
    [The effect of organized crime on Foreign Investments. An Empirical Analysis for the Italian Provinces]
    ," MPRA Paper 6417, University Library of Munich, Germany.
  5. Laura Resmini & Laura Casi, 2013. "Spatial complexity and interactions in regions? FDI attractiveness," ERSA conference papers, European Regional Science Association ersa13p1063, European Regional Science Association.

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