Real Estate Markets and the Location of Economic Activity
In determining the location of their economic activity, firms take many factors into account. According to neo-classical theories, natural advantages are the most important determinants of location. According to new economic geography theories (Fujita, Krugman and Venables (1999)), market access and low-cost access to intermediate goods matter most for location. The availability and affordability of industrial terrains is another key factor for firms that want to set up their production. It is obvious that this key factor combines both existing strands of literature. Regions with abundant land will have lower land prices, therefore attracting more firms. However, often these regions will be less favourably located as far as the access to the markets for final and intermediate goods is concerned. Firms will therefore have to trade off terrain costs against transportation costs. For governments willing to attract firms it is highly important to know what drives their location decisions. The purpose of this paper is to get a better insight in the link between the real estate market and the location decision of firms. In doing this we focus on the Flemish market. If a government wants to attract firms to its country it is clear that it will have to compete as far as the availability of attractive industrial terrains is concerned. The central question we address in this paper is whether a government should opt for a region-specific policy investing in a region as a whole - rather than for a sector-specific policy directed towards a sector irrespective of the region it invests in. Using investment data of different manufacturing sectors we provide a first answer to this problem.
|Date of creation:||Jun 2009|
|Contact details of provider:|| Web page: http://research.hubrussel.be|
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:hub:wpecon:200911. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Janssens)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.