Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania

Christian A. L. Hilber (1) , Ioan Voicu (2)

1 Geography and Environment
2 SUNY - State University of New York

We exploit the large inflow of FDI into Romania, after the revolution in 1989, to study the determinants of FDI location in transition economies. Using a conditional logit setup and choice-specific fixed effects, 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. A comparison with findings of other studies suggests that service agglomeration economies may be geographically quite localized.

Mots clés: Social Sciences & Humanities

Christian A. L. Hilber, Ioan Voicu. Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania. Regional Studies, 2010, 44 (03), pp.355-371. ⟨10.1080/00343400902783230⟩. ⟨hal-00579789⟩