How Labour Market Specialization influences the Regional Distribution of Greenfield Investments
The aim of this study is to investigate how labour market specialization influences the regional distribution of foreign direct investments (FDI) within a country. It examines all new foreign start-ups (Greenfield investments) that were made in Sweden between 2001 and 2008 and analyzes how these are related to different professionals in 21 regional host-economies. Labour market specialization is captured through location quotients which indicate the regional proportion of employees in one occupational category relative to the national proportion in the same occupational category. Thirteen different occupational categories are created and tested empirically with a negative binomial regression model on foreign start-ups across 10 different industries, in the primary, secondary and tertiary sector. The results indicate that foreign companies prefer to invest in regions which have a relative high share of professionals in business, finance, legal affairs and engineering. On the contrary regions with a relative high share of employees in public services, social work or administrative professionals appear not to be preferred by foreign companies.
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