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Economic institutions and the location strategies of European multinationals in their geographic neighborhood

Ascani, Andrea and Crescenzi, Riccardo and Iammarino, Simona (2016) Economic institutions and the location strategies of European multinationals in their geographic neighborhood. Economic Geography, 92 (4). pp. 401-429. ISSN 1944-8287

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Identification Number: 10.1080/00130095.2016.1179570

Abstract

This article investigates how the location behavior of Multinational Enterprises (MNEs) is shaped by the economic institutions of the host countries. The analysis covers a wide set of geographically proximate economies with different degrees of integration with the ‘Old’ 15 European Union (EU) members: New Member States, Accession and Candidate Countries, as well as European Neighborhood Policy (ENP) countries and the Russian Federation. The article aims to shed new light on the heterogeneity of MNE preferences for the host countries’ regulatory settings (including labor market and business regulation), legal aspects (i.e. protection of property rights and contract enforcement) and the weight of the government in the economy. By employing data on 6,888 greenfield investment projects, the random-coefficient Mixed Logit analysis shows that, while the quality of the national institutional framework is generally beneficial for the attraction of foreign investment, MNEs preferences over economic institutions are highly heterogeneous across sectors and business functions.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2016 Clark University
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
J Political Science > JF Political institutions (General)
JEL classification: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P33 - International Trade, Finance, Investment, and Aid
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R30 - General
Sets: Departments > Geography and Environment
Date Deposited: 23 Feb 2016 15:22
Last Modified: 27 Sep 2017 15:36
Projects: 266834, 639633-MASSIVE-ERC-2014-STG, 1096607, 266834, 639633-MASSIVE-ERC-2014-STG, 1096607
Funders: European Union Seventh Framework Programme, European Research Council, Economic and Social Research Council, Seventh Framework Programme, European Research Council, Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/65496

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