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Abstract:

cover
SERC/Urban and Spatial Programme Discussion Paper
On the Relative Importance of Agglomeration Economies in the Location of FDI Across British Regions
Jonathan Jones and Colin Wren August 2011
Paper No' SERCDP0089:
Full Paper (pdf)

JEL Classification: H3; O2; L2; R3


Tags: industrial location; agglomeration economies; intermediate goods; fdi

The paper examines the relative importance for industrial location of production linkages and knowledge spillovers, distinguishing between intermediate and non-intermediate goods that are backwards or forwards in nature. A novel approach is used to construct proxies for non-intermediate goods at a sub-national industry level based on an Input-Output transaction table. Taking data on location decisions by foreign-owned plants across British regions over 1985-2007, the paper finds support for the new economic geography explanation of location based on linkages over that due to spillovers. However, the importance of intermediate and non-intermediate linkages differs between manufacturing and service industries.