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On the Relative Importance of Agglomeration Economies in the Location of FDI Across British Regions

  • Jonathan Jones
  • Colin Wren
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    The paper examines the relative importance for industrial location of production linkages and knowledge spillovers, distinguishing between intermediate and non-intermediate goods that are backwards or forwards in nature. A novel approach is used to construct proxies for non-intermediate goods at a sub-national industry level based on an Input-Output transaction table. Taking data on location decisions by foreign-owned plants across British regions over 1985-2007, the paper finds support for the new economic geography explanation of location based on linkages over that due to spillovers. However, the importance of intermediate and non-intermediate linkages differs between manufacturing and service industries.

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    File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0089.pdf
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    Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0089.

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    Date of creation: Aug 2011
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    Handle: RePEc:cep:sercdp:0089
    Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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    1. Peter Debaere & Joonhyung Lee & Myungho Paik, 2010. "Agglomeration, backward and forward linkages: evidence from South Korean investment in China," Canadian Journal of Economics, Canadian Economics Association, vol. 43(2), pages 520-546, May.
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    6. Amiti, Mary & Smarzynska Javorcik, Beata, 2008. "Trade costs and location of foreign firms in China," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 129-149, February.
    7. Gilles Duranton & Diego Puga, 2000. "Diversity and Specialisation in Cities: Why, Where and When Does it Matter?," Urban Studies, Urban Studies Journal Limited, vol. 37(3), pages 533-555, March.
    8. Thomas Doring & Jan Schnellenbach, 2006. "What do we know about geographical knowledge spillovers and regional growth?: A survey of the literature," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 375-395.
    9. Duranton, Gilles & Puga, Diego, 2003. "Microfoundations of Urban Agglomeration Economies," CEPR Discussion Papers 4062, C.E.P.R. Discussion Papers.
    10. Wren, Colin & Taylor, Jim, 1999. "Industrial Restructuring and Regional Policy," Oxford Economic Papers, Oxford University Press, vol. 51(3), pages 487-516, July.
    11. Hilber, Christian A. L. & Voicu, Ioan, 2007. "Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," MPRA Paper 5137, University Library of Munich, Germany.
    12. Arauzo Carod, Josep Maria & Liviano Solís, Daniel & Manjón Antolín, Miguel C., 2008. "Empirical studies in industrial location: an assessment of their methods and results," Working Papers 2072/9257, Universitat Rovira i Virgili, Department of Economics.
    13. Matthieu Crozet & Thierry Mayer & Jean-Louis Mucchielli, 2004. "How do firms agglomerate? A study of FDI in france," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
    14. 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.
    15. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
    16. Head, C. Keith & Ries, John C. & Swenson, Deborah L., 1999. "Attracting foreign manufacturing: Investment promotion and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 197-218, March.
    17. Basile, Roberto & Castellani, Davide & Zanfei, Antonello, 2008. "Location choices of multinational firms in Europe: The role of EU cohesion policy," Journal of International Economics, Elsevier, vol. 74(2), pages 328-340, March.
    18. John Baldwin & Desmond Beckstead & W. Mark Brown & David Rigby, 2008. "Agglomeration and the Geography of Localization Economies in Canada," Regional Studies, Taylor & Francis Journals, vol. 42(1), pages 117-132.
    19. Sergio Mariotti & Lucia Piscitello & Stefano Elia, 2010. "Spatial agglomeration of multinational enterprises: the role of information externalities and knowledge spillovers," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 519-538, July.
    20. Steven Brand & Stephen Hill & Max Munday, 2000. "Assessing the Impacts of Foreign Manufacturing on Regional Economies: The Cases of Wales, Scotland and the West Midlands," Regional Studies, Taylor & Francis Journals, vol. 34(4), pages 343-355.
    21. Dahlberg, Matz & Eklöf, Matias, 2003. "Relaxing the IIA Assumption in Locational Choice Models: A Comparison Between Conditional Logit, Mixed Logit, and Multinomial Probit Models," Working Paper Series 2003:9, Uppsala University, Department of Economics.
    22. Vivien Procher, 2009. "FDI location choices: Evidence from French first-time movers," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer, vol. 3(3), pages 209-220, November.
    23. Michael Beenstock & Daniel Felsenstein, 2010. "Marshallian theory of regional agglomeration," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 155-172, 03.
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