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An empirical investigation of the determinants of the location of foreign direct investment in the Central and Eastern European countries using multilevel data

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posted on 2009-02-06, 13:29 authored by Simona Rasciute, Eric J. Pentecost, Helena Marques
This paper employs a novel multi-level data set and a multinomial logit model - to examine the factors explaining 1,223 foreign investment location decisions by firms in the EU(15), Japan, Norway, Russia, Switzerland and the US in 12 Central and Eastern European countries (CEECs). The highly significant empirical results, based on a general underlying model of imperfect competition, show that the responsiveness of foreign direct investment in the CEECs to country-level variables differs significantly both across sectors and across firms of different sizes and profitability. In particular, in addition to the traditional importance of market size and distance, firm size and the effective corporate tax rate are also important for the location of investment.

History

School

  • Business and Economics

Department

  • Economics

Publisher

© Loughborough University

Version

  • VoR (Version of Record)

Publication date

2007

Notes

This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2007_22.html

ISSN

1750-4171

Book series

Loughborough University. Department of Economics. Discussion Paper Series;WP 2007 - 22

Language

  • en

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