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Market Potential, Productivity and Foreign Direct Investment: Some Evidence from Three Case Studies

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  • Lionel Artige
  • Rosella Nicolini

Abstract

This paper aims at analysing the importance of local determinants to foreign direct investment (FDI) in three European regional case studies. The originality of the approach lies in the use of disaggregated data by sector and by region. The results are three-fold. First, regional demand and productivity are fundamental FDI determinants, confirming most studies with national data. Second, regional FDI inflows are more dependent on regional than national determinants. Finally, the effect of market potential measured with absolute gross domestic product (GDP) on regional FDI diminishes linearly with distance and does not when measured with GDP per capita.

Suggested Citation

  • Lionel Artige & Rosella Nicolini, 2009. "Market Potential, Productivity and Foreign Direct Investment: Some Evidence from Three Case Studies," European Planning Studies, Taylor & Francis Journals, vol. 18(2), pages 147-168, January.
    • Handle: RePEc:taf:eurpls:v:18:y:2009:i:2:p:147-168
    DOI: 10.1080/09654310903491531
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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. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development.
    3. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Rahim KIA LASHAKI & Elsadig Musa AHMED, 2017. "FDI Inflow Spillover Effect Implications On The Asia Pacific Productivity Growth Through The Export Channel," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 26(3), pages 57-72.
    2. Zahra Dehghan Shabani & Ali Hussein Samadi & Amene Zare, 2017. "Does Market Potential Matter? Evidence on the Impact of Market Potential on Economic Growth in Iranian Provinces," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 21(4), pages 847-863, Autumn.

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