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dc.contributor.authorBarry, Franken_US
dc.contributor.authorGörg, Holgeren_US
dc.contributor.authorStrobl, Ericen_US
dc.description.abstractMany previous studies have shown that the localization of firms can be an important factor in attracting new foreign direct investment into a host country. What has been missing in this literature thus far, however, is an investigation into the reasons why industry clusters attract firms. We distinguish between ‘efficiency agglomerations’ – firms locating close to each other because they can increase their efficiency by doing so, and ‘demonstration effects’, whereby existing firms send signals to new investors as to the reliability of the host country and newly entering firms follow previous firms. In this Paper we try to disentangle these two effects, by examining the location of US and UK firms in Ireland. We calculate proxies for ‘efficiency agglomerations’ and ‘demonstration effects’ and include these proxies in an empirical model of the location decision of firms. For US firms, we find that both efficiency agglomeration and demonstration effects are important determinants of entry. For UK firms, however, the evidence is not as clear cut.-
dc.publisher|aCentre for Economic Policy Research |cLondon-
dc.relation.ispartofseries|aCEPR Discussion Paper Series, Centre for Economic Policy Research (CEPR), London |x2907-
dc.subject.stwBetriebliche Standortwahlen_US
dc.titleForeign direct investment, agglomerations and demonstration effects: An empirical investigationen_US
dc.typeWorking Paperen_US

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