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Regional foreign direct investment in manufacturing. Do agglomeration economies matter?

  • Àngels Pelegrín


    (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))

  • Catalina Bolancé


    (RFA-IREA; Universitat de Barcelona (UB))

This paper examines the role played by agglomeration economies as location determinants of regional foreign direct investment in manufacturing. The analysis reveals that foreign direct investment location is dependent on specific industry traits, and that agglomeration economies appear as the strongest pull factors. The model, estimated with panel data, finds evidence, first, that industries with a high level of linkages are attracted to regions with high manufacturing activity; and, second, that locations which accumulate R+D activities attract high-tech industries. Finally, one cost-oriented industry was found not to value agglomeration economies, being attracted instead to regions with low salary levels.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2006/2.

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Length: 39 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:ieb:wpaper:1027554art216
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