How do firms agglomerate? A study of FDI in France

Abstract

This paper studies the determinants of location choice by foreign investors in France using a sample of almost 4000 foreign investments over 10 years and 92 locations. Concerning agglomeration effects, we find very strong evidence of positive spillovers between firms, and identify detailed patterns of clustering, assessing, for instance, the countries of origin and the industries for which those spillovers are the most substantial. Concerning regional policies, we find very little evidence of any positive impact. Finally, we identify a 'learning process' of FDI, the location decisions becoming more remote from the country of origin during the period we study. D

Network and border effects: Where do foreign multinationals locate in Germany?

“…By contrast, the coefficients on the local and the external market potential increase dramatically. This result is not entirely surprising and in line with the findings of Crozet, Mayer, and Mucchielli (2004) for inward FDI into French departments. As in their study, differences in market potential may be more important over time than across federal states.…”

“…In contrast, US MNEs seem to be located in metropolitan areas where land prices are also high. Using wages instead of unit labour costs and omitting land prices, Crozet, Mayer, and Mucchielli (2004) find that US investments even react positively to high wages in French regions. Like in this paper, the authors further estimate a relatively low impact of market access on Dutch Note: This table presents country-specific estimation results based on the nested and the conditional logit estimator.…”

“…Crozet, Mayer, and Mucchielli, 2004 for France; Barrios, Görg, andStrobl, 2006 for Ireland andBasile, 2004 for Italy). In Germany, media and academic research have been heavily concerned with firms shifting their production facilities to low cost countries while staying comparably silent about the determinants and effects of inward FDI.…”

Re-Investment and the Survival of Foreign-Owned Plants

“…The promotion of foreign direct investment (FDI) is an important economic development objective of governments and agencies throughout the industrialised world (Friedman, 1992;Kim et al, 2003;and Crozet et al, 2004). However, success in attracting the plants is blighted by their failure, with exit hazard rates for multinational and foreign-owned plants up to 40 per cent higher than for domestic plants with similar characteristics (Görg and Strobl, 2003;Fabbri et al, 2002;and Colombo and Delamstro, 2000).…”

Market Potential, Productivity and Foreign Direct Investment: Some Evidence from Three Case Studies

“…In its modern versions, this function includes profitability and productivity potential measures of a location and its neighbouring area. Using this approach, Crozet, Mayer and Mucchielli (2004) show that Paris and the regions near the frontiers are major recipients of FDI by using plant-level data for the 92 French departments. The effects of market size and agglomeration are positive while they are negative for wages at plant level.…”