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Agglomeration economies and the location of foreign direct investment: empirical evidence from Romania

Hilber, Christian A.L. and Voicu, Ioan (2007) Agglomeration economies and the location of foreign direct investment: empirical evidence from Romania. London School of Economics and Political Science, London, UK.

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Abstract

Relatively little is known about the determinants of FDI location in transition economies. We exploit the large inflow of FDI into Romania, after the revolution in 1989, to study this question. Using a conditional logit setup, we find that external economies from service agglomeration are the main determinant of FDI-location. An increase in service employment density by 10 percent makes the average Romanian county 11.9 percent more likely to attract a foreign investor. Industry specific foreign and domestic agglomeration economies and labor conflicts also impact FDI-location. Our findings imply that results are sensitive to the inclusion of locational fixed effects.

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk
Additional Information: © 2007 The Authors
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Departments > Geography and Environment
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 28 Jan 2008
URL: http://eprints.lse.ac.uk/3199/

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