Agglomeration economies and the location of foreign direct investment: A meta‐analysis

Jones, Jonathan

doi:10.1111/jors.12335

Cited by 22 publications

(17 citation statements)

References 143 publications

(112 reference statements)

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“…One of the phenomena that has been most researched in the current literature on location choice is FDI agglomerations. Jones (2017), found that the majority of the studies focus on analysing the effect and externalities of agglomeration economies on FDI and/or the reasons why the firms decide to co-locate with other firms, especially with those with the same activity (industrial clusters). Wu et al (2017) have examined how host country institutional factors influence agglomeration and they found that foreign firms respond to institutional pressures by agglomerating in countries characterized by collectivism and economic and political uncertainty.…”

Section: Introductionmentioning

confidence: 99%

Developing international social capital: The role of communities of practice and clustering

Urzelai

Puig

2019

International Business Review

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One criteria regarding where to invest in foreign markets is linked to the international social capital (ISC) that exists on the place, which enables the access to local knowledge and other location-specific advantages. There are alternative ways to create and make use of that ISC that are still unexplored by International Business literature. In this paper, we study the geographic communities of practice (CoP) that are formed by FDI firms from the same country-of-origin (the so-called country-of-origin clusters). For that purpose, the paper adopts a qualitative methodological approach through an inductive case study of expatriates from 13 Spanish subsidiaries co-located in China. Our findings suggest that there are particular mechanisms based on the informal connections and repeated interactions facilitated by a common language and non-competitive relationships that create an ISC in the CoP. Moreover, our analysis shows there is a heterogeneity in the way these mechanisms are developed and used by the member firms, and this is due to organizational and individual factors, as well as leadership dynamics. Our work contributes to Internationalization and Network theories by identifying unexplored mechanisms through which the ISC is developed at the host country level. Besides, it helps identifying competences (i.e. clustering competences) that help expatriate managers to be successful in their international assignments.

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Section: Introductionmentioning

confidence: 99%

Developing international social capital: The role of communities of practice and clustering

Urzelai

Puig

2019

International Business Review

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“…On the one hand, provided that the prevailing FDI strategy is the same as in our case‐study and therefore there exists complementary of FDI, the recommendation of designing joint strategies at regional level could also be accepted for other countries. In addition, as the presence of agglomeration is a feature of FDI not only in Spain but also in most countries (Jones ), it is obvious that the attractiveness degree of regions depends on their geographical location and that our conclusion stating that some regions should strive more than others to entice FDI holds. The type of effort described here is not, however, applicable to every country; it should be qualified depending on the FDI strategy that predominates.…”

Section: Discussionmentioning

confidence: 72%

Spatial Linkages in FDI Location: Evidence from the Spanish Regions

Gutiérrez‐Portilla

Maza

Villaverde

2019

Tijd voor Econ & Soc Geog

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This paper examines the main factors behind the regional location of foreign direct investment (FDI) in Spain, at both the aggregate and sectoral levels, over the 1996-2013 period. To do so, a panel spatial Durbin model, which allows us to unveil patterns of substitution or complementarity in FDI across regions, is estimated. Our findings reveal that inward FDI in one region is complementary to that in neighbouring regions, a conclusion that is consistent with a complex vertical FDI strategy. Besides, they tend to confirm the hypotheses that FDI exhibits some inertia and is attracted by regions with: (i) large market size; (ii) large surrounding-market potential; and (iii) high levels of human capital and wages. However, the results cast some doubts on the role played by infrastructure, R&D and regional differences in taxes as key elements in attracting FDI.

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“…As controls, agglomeration terms from industrial linkages are included for each of the foreign and domestic sectors, where the former is based on the number of FDI projects in the previous period and the latter on employment data (see Appendix Table A). A Jacobs term is added for industrial diversity for the linkages that go across industries (Jones, 2017), as well as a market structure term for the ease of entry into an industry. EU Structural Funds might attract FDI (Basile et al., 2008), but these could just signal that a country is underdeveloped.…”

Section: Data and Variablesmentioning

confidence: 99%

Motives for foreign direct investment location in Europe and EU enlargement

2020

Self Cite

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European Union (EU) enlargement of the mid-2000s is likely to have changed the motives for foreign direct investment (FDI) location between the existing Member States (the EU15) and the new entrants of Central and Eastern Europe (CEECs), but it is poorly understood. This paper uses the framework of Dunning’s eclectic paradigm and data for 35,105 foreign investments in Europe not only to examine if the motives differ between these, but also how they are affected by the enlargement. Three asset-exploiting motives of market, resource and efficiency seeking are explored using a conditional logit model for the location choice. This is separately for greenfield and brownfield FDI, involving new facilities or jobs, where the latter is efficiency seeking from an expansion or a co-location of functions. The paper finds greenfield FDI in the CEECs seeks an export platform for the EU market and a low-skilled workforce but a national market and higher skills in the EU15. Brownfield FDI differs from this for expansions only, for which the EU market is important, reflecting scale economies. Surprisingly, EU enlargement has a much stronger effect on the FDI location motives in the EU15 by increasing the importance of the European market, which is possibly because the CEEC liberalisation was ongoing throughout the accession process. The paper finds evidence that the differences in the motives between the CEECs and EU15 are narrowing over time, but they are pronounced, and it is argued that they will persist.

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Agglomeration economies and the location of foreign direct investment: A meta‐analysis

Cited by 22 publications

References 143 publications

Developing international social capital: The role of communities of practice and clustering

Developing international social capital: The role of communities of practice and clustering

Spatial Linkages in FDI Location: Evidence from the Spanish Regions

Motives for foreign direct investment location in Europe and EU enlargement

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