IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v12y2005i1p105-121.html
   My bibliography  Save this article

local industrial systems and the location of FDI in Italy

Author

Listed:
  • Lisa De Propris
  • Nigel Driffield
  • Stefano Menghinello

Abstract

This article investigates the determinants of foreign direct investment (FDI) location across Italian provinces. Specifically it examines the relationship between industry-specific local industrial systems and the location of inward FDI. This extends previous analysis beyond the mere density of activity, to illustrate the importance of the specific nature of agglomerations in attracting inward investment. The article develops a model of FDI location choice using a unique FDI database stratified by industry and province. The results also suggest that the importance of agglomeration differs between industries, and offers some explanation for this.

Suggested Citation

  • Lisa De Propris & Nigel Driffield & Stefano Menghinello, 2005. "local industrial systems and the location of FDI in Italy," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 12(1), pages 105-121.
    • Handle: RePEc:taf:ijecbs:v:12:y:2005:i:1:p:105-121
    DOI: 10.1080/1357151042000323085
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/1357151042000323085
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1357151042000323085?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paulo Guimarães & Octávio Figueirdo & Douglas Woodward, 2003. "A Tractable Approach to the Firm Location Decision Problem," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 201-204, February.
    2. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    3. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    4. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    5. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    6. Kogut, Bruce & Chang, Sea Jin, 1991. "Technological Capabilities and Japanese Foreign Direct Investment in the United States," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 401-413, August.
    7. Bas, Christian Le & Sierra, Christophe, 2002. "'Location versus home country advantages' in R&D activities: some further results on multinationals' locational strategies," Research Policy, Elsevier, vol. 31(4), pages 589-609, May.
    8. Neven, Damien & Siotis, Georges, 1993. "Foreign Direct Investment in the European Community: Some Policy Issues," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 9(2), pages 72-93, Summer.
    9. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2004. "The geographic distribution of production activity in the UK," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 533-564, September.
    10. Paulo Guimarães & Octávio Figueiredo & Douglas Woodward, 2004. "Industrial Location Modeling: Extending the Random Utility Framework," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 1-20, February.
    11. John H Dunning, 1998. "Location and the Multinational Enterprise: A Neglected Factor?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 45-66, March.
    12. Cantwell, John & Janne, Odile, 1999. "Technological globalisation and innovative centres: the role of corporate technological leadership and locational hierarchy1," Research Policy, Elsevier, vol. 28(2-3), pages 119-144, March.
    13. John Cantwell & Simona Iammarino, 2000. "Multinational Corporations and the Location of Technological Innovation in the UK Regions," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 317-332.
    14. Hogenbirk, Annelies & Narula, Rajneesh, 2004. "Location and agglomeration of FDI in The Netherlands: implications for policy," Research Memorandum 006, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    15. Cantwell, John & Santangelo, Grazia D., 1999. "The frontier of international technology networks: sourcing abroad the most highly tacit capabilities," Information Economics and Policy, Elsevier, vol. 11(1), pages 101-123, March.
    16. Bruno Van Pottelsberghe De La Potterie & Frank Lichtenberg, 2001. "Does Foreign Direct Investment Transfer Technology Across Borders?," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 490-497, August.
    17. Sergio Mariotti & Lucia Piscitello, 1995. "Information Costs and Location of FDIs within the Host Country: Empirical Evidence from Italy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(4), pages 815-841, December.
    18. Cletus C. Coughlin & Eran Segev, 2000. "Location Determinants of New Foreign‐Owned Manufacturing Plants," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 323-351, May.
    19. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    20. Coughlin, Cletus C & Terza, Joseph V & Arromdee, Vachira, 1991. "State Characteristics and the Location of Foreign Direct Investment within the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 675-683, November.
    21. Yoke-Tong Chew & Henry Wai-Chung Yeung, 2001. "The SME Advantage: Adding Local Touch to Foreign Transnational Corporations in Singapore," Regional Studies, Taylor & Francis Journals, vol. 35(5), pages 431-448.
    22. Guimaraes, Paulo & Figueiredo, Octavio & Woodward, Douglas, 2000. "Agglomeration and the Location of Foreign Direct Investment in Portugal," Journal of Urban Economics, Elsevier, vol. 47(1), pages 115-135, January.
    23. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    24. Wheeler, David & Mody, Ashoka, 1992. "International investment location decisions : The case of U.S. firms," Journal of International Economics, Elsevier, vol. 33(1-2), pages 57-76, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Attilio Di Battista, 2013. "The Role of Geography and Institutions in determining FDI flows into Italian Provinces," ERSA conference papers ersa13p1185, European Regional Science Association.
    2. Frank McDonald & Heinz-Josef Tüselmann & Svitlana Voronkova & Pavlos Dimitratos, 2005. "The Strategic Development of Foreign-Owned Subsidiaries and Direct Employment in Host Locations in the United Kingdom," Environment and Planning C, , vol. 23(6), pages 867-882, December.
    3. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    4. Ilgaz Arikan & Ipek Koparan & Asli M Arikan & Oded Shenkar, 2022. "Dynamic capabilities and internationalization of authentic firms: Role of heritage assets, administrative heritage, and signature processes," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(4), pages 601-635, June.
    5. Anna Maria Ferragina & Fernanda Mazzotta, 2014. "Agglomeration economies and global activities: impact on firm survival," ERSA conference papers ersa14p348, European Regional Science Association.
    6. Bellandi, Marco & De Propris , Lisa, 2015. "Three Generations of Industrial districts," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 32, pages 75-87.
    7. Anna Ferragina & Fernanda Mazzotta, 2015. "Agglomeration economies in Italy: impact on heterogeneous firms’ exit in a multilevel framework," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(4), pages 395-440, December.
    8. Giuseppe Tattara, 2009. "The Internationalisation of Production Activities of Italian Industrial Districts," Chapters, in: Giacomo Becattini & Marco Bellandi & Lisa De Propis (ed.), A Handbook of Industrial Districts, chapter 48, Edward Elgar Publishing.
    9. Roberto Basile & Luigi Benfratello & Davide Castellani, 2012. "Geoadditive models for regional count data: an application to industrial location," ERSA conference papers ersa12p83, European Regional Science Association.
    10. Cesare Imbriani & Piergiuseppe Morone & Rosanna Pittiglio & Filippo Reganati, 2012. "Agglomeration economies, local cluster and foreign direct investments a pilot study for Emilia Romagna region," Economics Bulletin, AccessEcon, vol. 32(1), pages 662-674.
    11. Roberto Basile & Luigi Benfratello & Davide Castellani, 2011. "Spatial clustering and nonlinearities in the location of multinational firms," Quaderni del Dipartimento di Economia, Finanza e Statistica 90/2011, Università di Perugia, Dipartimento Economia.
    12. Marco Bellandi & Lisa De Propris, 2012. "Small Firms and Industrial Districts," Chapters, in: Michael Dietrich & Jackie Krafft (ed.), Handbook on the Economics and Theory of the Firm, chapter 27, Edward Elgar Publishing.
    13. Blanc-Brude, Frédéric & Cookson, Graham & Piesse, Jenifer & Strange, Roger, 2014. "The FDI location decision: Distance and the effects of spatial dependence," International Business Review, Elsevier, vol. 23(4), pages 797-810.
    14. Renato Redondi & Mariasole Bannò & Marco Mutinelli, 2011. "Air Connectivity and Foreign Direct Investments The economic effects of the introduction of new routes," ERSA conference papers ersa11p249, European Regional Science Association.
    15. Nunzia Carbonara & Ilaria Giannoccaro, 2014. "Determinants of MNC location choice in industrial districts: an empirical analysis in Italy," Chapters, in: Charlie Karlsson & Börje Johansson & Roger R. Stough (ed.), Agglomeration, Clusters and Entrepreneurship, chapter 5, pages 85-102, Edward Elgar Publishing.
    16. Roberto Basile & Luigi Benfratello & Davide Castellani, 2010. "Location Determinants of Greenfield Foreign Investments in the Enlarged Europe: Evidence from a Spatial Autoregressive Negative Binomial Additive Model," Working papers 10, Former Department of Economics and Public Finance "G. Prato", University of Torino.
    17. Ioan Sebastian JUCU, 2022. "When Service-Led Activities and Tertiarization Processes Replace Old Industries and Local Brownfields: Changes, Perceptions and Perspectives in the Northern Industrial Area of Lugoj, Romania," Land, MDPI, vol. 12(1), pages 1-24, December.
    18. Canello, Jacopo, 2016. "Migrant entrepreneurs and local networks in industrial districts," Research Policy, Elsevier, vol. 45(10), pages 1953-1964.
    19. Comi, Simona & Grasseni, Mara & Resmini, Laura, 2021. "Can judicial efficiency improve territorial attractiveness to FDI? The Italian experience," European Journal of Political Economy, Elsevier, vol. 70(C).
    20. Constantina Kottaridi & Fragkiskos Filippaios & Marina Papanastassiou & Robert Pearce, 2013. "Regional Mix and the Roles of Foreign Subsidiaries: A New Conceptualization and Empirical Evidence on the UK Case," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 63(1-2), pages 47-74, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kandogan, Yener, 2012. "Regional foreign direct investment potential of the states within the US," Journal of Economics and Business, Elsevier, vol. 64(4), pages 306-322.
    2. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    3. Christian Hilber & Ioan Voicu, 2010. "Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 355-371.
    4. Josep‐Maria Arauzo‐Carod & Daniel Liviano‐Solis & Miguel Manjón‐Antolín, 2010. "Empirical Studies In Industrial Location: An Assessment Of Their Methods And Results," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 685-711, August.
    5. Colin Wren & Jonathan Jones, 2011. "Assessing The Regional Impact Of Grants On Fdi Location: Evidence From U.K. Regional Policy, 1985–2005," Journal of Regional Science, Wiley Blackwell, vol. 51(3), pages 497-517, August.
    6. Andrea Ascani & Riccardo Crescenzi & Simona Iammarino, 2015. "Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood," LEQS – LSE 'Europe in Question' Discussion Paper Series 97, European Institute, LSE.
    7. 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).
    8. Hassan, Sohaib Shahzad & Jindra, Björn & Cantner, Uwe & Günther, Jutta, 2013. "Emerging market multinationals in the European Union – A location choice analysis," MPRA Paper 52002, University Library of Munich, Germany.
    9. Angels Pelegrin & Catalina Bolance, 2008. "Regional Foreign Direct Investment in Manufacturing. Do Agglomeration Economies Matter?," Regional Studies, Taylor & Francis Journals, vol. 42(4), pages 505-522.
    10. Mayer, T. & Mejean, I. & Nefussi, B., 2010. "The location of domestic and foreign production affiliates by French multinational firms," Journal of Urban Economics, Elsevier, vol. 68(2), pages 115-128, September.
    11. Riccardo Crescenzi & Carlo Pietrobelli & Roberta Rabellotti, 2012. "Innovation Drivers, Value Chains and the Geography of Multinational Firms in European Regions," LEQS – LSE 'Europe in Question' Discussion Paper Series 53, European Institute, LSE.
    12. Roberto Basile & Luigi Benfratello & Davide Castellani, 2012. "Geoadditive models for regional count data: an application to industrial location," ERSA conference papers ersa12p83, European Regional Science Association.
    13. Fabienne Boudier‐Bensebaa, 2005. "Agglomeration economies and location choice: Foreign direct investment in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(4), pages 605-628, October.
    14. Megha Mukim & Peter Nunnenkamp, 2012. "The Location Choices of Foreign Investors: A District-level Analysis in India," The World Economy, Wiley Blackwell, vol. 35(7), pages 886-918, July.
    15. Jonathan Jones & Colin Wren, 2008. "FDI Location Across British Regions and Inward Investment Policy," SERC Discussion Papers 0013, Centre for Economic Performance, LSE.
    16. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mcgcdbi is not listed on IDEAS
    17. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2007. "Firm location decisions, regional grants and agglomeration externalities," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 413-435, April.
    18. Agnieszka Chidlow & Stephen Young, 2008. "Regional Determinants of FDI Distribution in Poland," William Davidson Institute Working Papers Series wp943, William Davidson Institute at the University of Michigan.
    19. repec:hal:spmain:info:hdl:2441/10162 is not listed on IDEAS
    20. Cesare Imbriani & Piergiuseppe Morone & Rosanna Pittiglio & Filippo Reganati, 2012. "Agglomeration economies, local cluster and foreign direct investments a pilot study for Emilia Romagna region," Economics Bulletin, AccessEcon, vol. 32(1), pages 662-674.
    21. Jindra, Björn & Hassan, Sohaib S. & Cantner, Uwe, 2016. "What does location choice reveal about knowledge-seeking strategies of emerging market multinationals in the EU?," International Business Review, Elsevier, vol. 25(1), pages 204-220.
    22. Roberto Basile & Luigi Benfratello & Davide Castellani, 2010. "Location Determinants of Greenfield Foreign Investments in the Enlarged Europe: Evidence from a Spatial Autoregressive Negative Binomial Additive Model," Working papers 10, Former Department of Economics and Public Finance "G. Prato", University of Torino.

    More about this item

    Keywords

    Local Industrial Systems; Knowledge Sourcing; Agglomeration; Count Data Econometrics; JEL classification: F23; R12;
    All these keywords.

    JEL classification:

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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:12:y:2005:i:1:p:105-121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.