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Title:Network and border effects: Where do foreign multinationals locate in Germany? PDF Logo
Authors:Spies, Julia
Issue Date:2009
Series/Report no.:IAW-Diskussionspapiere 47
Abstract:This study assesses the determinants of location choices of foreign multinational firms at the level of German federal states. Adjacency and existing firm networks are assumed to influence the investors' profits in a given location by overcoming informational disadvantages when entering the new market. A conditional and a nested logit model resemble the structure of the location choice process of individual investors well. By using affliate-level data between 1997 and 2005, the results confirm that firms react positively to local demand, a common border and existing firm networks, while unit labour costs exhibit the expected negative impact. In the sectoral estimations, it is shown that these effects vary in their relevance among manufacturing and service affliates, and between upstream and downstream activities.
Subjects:Location choice
multinational firms
nested logit model
JEL:F23
R39
Document Type:Working Paper
Appears in Collections:IAW-Diskussionspapiere, Institut für Angewandte Wirtschaftsforschung (IAW)

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