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The Dynamics of FDI Location: A Markov Analysis for British Regions

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  • Jonathan Jones
  • Colin Wren

Abstract

The paper uses the framework of Markov chains to examine convergence in the location ofinward foreign direct investment across the regions of Great Britain over 1985-2005. Ananalysis is undertaken by industry group that disaggregates manufacturing and services. Itfinds convergence in regional FDI shares, both overall and by industry, which supportsagglomeration. As explanations, a weakening of regional policy has led manufacturing FDI tospread-out from 'north' to 'south', but in services there is a shift in FDI location within the'south' from core to contiguous regions, suggesting diseconomies at the core. The paper findsdifferent spatial processes and draws implications for regional policy.

Suggested Citation

  • Jonathan Jones & Colin Wren, 2009. "The Dynamics of FDI Location: A Markov Analysis for British Regions," SERC Discussion Papers 0035, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:sercdp:0035
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    File URL: http://cep.lse.ac.uk/pubs/download/sercdp0035.pdf
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    1. repec:rre:publsh:v:33:y:2003:i:1:p:61-72 is not listed on IDEAS
    2. Maarten Bosker & Waldo Krugell, 2008. "Regional Income Evolution In South Africa After Apartheid," Journal of Regional Science, Wiley Blackwell, vol. 48(3), pages 493-523, August.
    3. Julie Le Gallo, 2004. "Space-Time Analysis of GDP Disparities among European Regions: A Markov Chains Approach," International Regional Science Review, , vol. 27(2), pages 138-163, April.
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    Cited by:

    1. Colin Wren, 2009. "Onward the Spatial: an Essay on the Nature and Relevance of Regional Economics," Spatial Economic Analysis, Taylor & Francis Journals, vol. 4(4), pages 447-465.

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    Keywords

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    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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