Attracting Foreign Direct Investments in Europe: Are Italian Regions Doomed?

Centro Studi Luca d'Agliano Development Studies Working Paper No. 200

36 Pages Posted: 26 Jul 2005

See all articles by Roberto Basile

Roberto Basile

University of L'Aquila - Faculty of Economics

Luigi Benfratello

University of Turin - Department of Economics and Financial Sciences G. Prato; CERIS-CNR

Davide Castellani

Henley Business School

Date Written: March 2005

Abstract

During the nineties, Europe became a major recipient of FDIs but Italian regions have been largely excluded from this process. Was it due to their characteristics, or were Italian regions 'doomed' by a negative country effect? In this paper we address this issue by estimating the determinants of multinational firms' location choices in 52 EU regions. We find that Italian regions indeed attracted significantly less than their observable potential, and that this could be explained by the inefficiency of the bureaucratic apparatus and of the legal system. The effect of taxes is instead strongly sensitive to the inclusion of agglomeration variables and is asymmetric across regions.

Keywords: Multinational firms, location choices, Italy, institutions and policies, negative binomial regression

JEL Classification: F23, C35, O52

Suggested Citation

Basile, Roberto and Benfratello, Luigi and Castellani, Davide, Attracting Foreign Direct Investments in Europe: Are Italian Regions Doomed? (March 2005). Centro Studi Luca d'Agliano Development Studies Working Paper No. 200, Available at SSRN: https://ssrn.com/abstract=760344 or http://dx.doi.org/10.2139/ssrn.760344

Roberto Basile (Contact Author)

University of L'Aquila - Faculty of Economics ( email )

Roio Poggio, 67040
Italy

Luigi Benfratello

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 6706072 (Phone)
+39 011 6706062 (Fax)

CERIS-CNR ( email )

Italy

Davide Castellani

Henley Business School ( email )

Whiteknights
Reading, Berkshire RG6 6UD
United Kingdom

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