Editor : OECD working paper, WPGI, october 2008
Authors : Loriane Py and Fabrice Hatem
Where do multinational locate manufacturing and services projects in Europe and why ?
The increase in Foreign Direct Investment in service activities is the most striking aspect of the way our economies are evolving at present. The two trends involved are, first, the internationalisation of the service sector and, second, the internationalisation within multinational firms of what are known as « tertiary support » functions. There are no studies that provide an explanation as to how location choices for these activities differ from those identified with respect to manufacturing. We propose to tackle this question by means of an analysis – segmented according to their sectoral and then functional nature – of location decisions concerning 14 000 investment projects in Europe over the period 2002-2006. The findings confirm the existence of location criteria specific to the different sectors of activity or functions within firms. Market size, skilled labour resources and a shared official language are particularly attractive factors for the services sector. A comparison of location criteria by function for its part reveals even more marked differences between activities.
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