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What determines the location choice of multinational firms in the information and communication technologies sector?

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  • Iulia Siedschlag
  • Xiaoheng Zhang
  • Donal Smith

Abstract

We analyse the location decisions of 7931 foreign affiliates in the information and communication technologies (ICT) sector established in the European Union (EU) over the period 1998--2008. Our results suggest that, on average, the location probability of foreign-owned firms in ICT industries increased with market size, market potential, the presence of other foreign-owned firms in the ICT sector, human capital, income tax, and the size of the services sector in the neighbouring regions. Labour costs and human capital in neighbouring regions decreased the location probability. Further, our estimates suggest that multinationals based in the EU and the USA were attracted by market size and agglomeration economies from other foreign-owned firms in the ICT sector. However, they responded differently with respect to other location determinants such as income tax rates, human capital and innovation intensity.

Suggested Citation

  • Iulia Siedschlag & Xiaoheng Zhang & Donal Smith, 2013. "What determines the location choice of multinational firms in the information and communication technologies sector?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(6), pages 581-600, September.
    • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:6:p:581-600
    DOI: 10.1080/10438599.2013.783266
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    References listed on IDEAS

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    1. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, December.
    2. Charlie Karlsson & Gunther Maier & Michaela Trippl & Iulia Siedschlag & Gavin Murphy, 2010. "ICT and Regional Economic Dynamics: A Literature Review," JRC Research Reports JRC59920, Joint Research Centre.
    3. Hogenbirk, Annelies & Narula, Rajneesh, 2004. "Location and agglomeration of FDI in The Netherlands: implications for policy," Research Memorandum 006, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
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    1. Ronald B. Davies & Iulia Siedschlag & Zuzanna Studnicka, 2021. "The impact of taxes on the extensive and intensive margins of FDI," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(2), pages 434-464, April.
    2. Hasbi, Maude, 2020. "Impact of very high-speed broadband on company creation and entrepreneurship: Empirical Evidence," Telecommunications Policy, Elsevier, vol. 44(3).
    3. Ronald B. Davies & Neill Killeen, 2018. "The Effect of Tax Treaties on Market Based Finance: Evidence using Firm-Level Data," Working Papers 201818, School of Economics, University College Dublin.
    4. Bergin, Adele & Curristan, Sarah & Farrell, Niall & Laurence, James & Lynch, Muireann Á. & McGinnity, Frances & McGuinness, Seamus & Russell, Helen & Smyth, Emer, 2022. "Scoping papers for research on ‘The economic and social opportunities from increased cooperation on the Shared Island'," Research Series, Economic and Social Research Institute (ESRI), number SUSTAT112.
    5. Daire McCoy & Sean Lyons & Edgar Morgenroth & Donal Palcic & Leonie Allen, 2018. "The impact of broadband and other infrastructure on the location of new business establishments," Journal of Regional Science, Wiley Blackwell, vol. 58(3), pages 509-534, June.
    6. Ronald B. Davies & Neill Killeen, 2018. "Location decisions of non‐bank financial foreign direct investment: Firm‐level evidence from Europe," Review of International Economics, Wiley Blackwell, vol. 26(2), pages 378-403, May.
    7. Duffy, David & McQuinn, Kieran & Morley, Ciara & Foley, Daniel, 2016. "Quarterly Economic Commentary, Summer 2016," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20162, march.
    8. Hasbi, Maude, 2017. "Impact of Very High-Speed Broadband on Local Economic Growth: Empirical Evidence," 14th ITS Asia-Pacific Regional Conference, Kyoto 2017: Mapping ICT into Transformation for the Next Information Society 168484, International Telecommunications Society (ITS).
    9. Davies, Ronald B. & Siedschlag, Iulia & Studnicka, Zuzanna, 2018. "Corporate taxation and the location choice of foreign direct investment in EU countries," Papers WP591, Economic and Social Research Institute (ESRI).
    10. Martina Lawless & Daire McCoy & Edgar L. W. Morgenroth & Conor M. O”Toole, 2018. "Corporate tax and location choice for multinational firms," Applied Economics, Taylor & Francis Journals, vol. 50(26), pages 2920-2931, June.
    11. McCoy, Daire & Lyons, Sean & Morgenroth, Edgar & Palcic, Donal & Allen, Leonie, 2016. "The impact of local infrastructure on new business establishments," MPRA Paper 69074, University Library of Munich, Germany.

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