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Paper No' SERCDP0035: | Full paper
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Keywords: Foreign direct investment; location; transition matrices; agglomeration; regional policy
JEL Classification: O12; L20; R58
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: SERC Discussion Papers
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Abstract:The paper uses the framework of Markov chains to examine convergence in the location of inward foreign direct investment across the regions of Great Britain over 1985-2005. An analysis is undertaken by industry group that disaggregates manufacturing and services. It finds convergence in regional FDI shares, both overall and by industry, which supports agglomeration. As explanations, a weakening of regional policy has led manufacturing FDI to spread-out from ‘north’ to ‘south’, but in services there is a shift in FDI location within the ‘south’ from core to contiguous regions, suggesting diseconomies at the core. The paper finds different spatial processes and draws implications for regional policy.
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