Économie et Statistique n° 363-364-365 - Firms on The Global Markets Labour Market - Attractiveness - Debt - Enlargement toward East en South
Internationalisation and multinational firm locations: the example of French firms in Europe
Following a late start with their internationalisation process, the French multinationals are still concentrating their direct investment to a large extent in Europe. In 2000, over 38% of French subsidiaries abroad were located in the European Union. They were established mainly in neighbouring countries (United Kingdom, Belgium, Germany, Italy and Spain). These investors preferred mainly the capital area and the most industrialised regions in the countries where they set up. This paper analyses the deciding factors for the location of French multinational manufacturing industry firms in seven European countries and in forty-seven European regions from 1987 to 1994 by studying 614 individual location decisions. The econometric study uses a nested logit model. It is based on the assumption of the business location decision-making process having a two-level hierarchical structure: nations and regions. The empirical findings show that the probability of setting up a subsidiary somewhere in Europe during the period studied depends on both national and regional variables and, generally, the location choice determinants only come into play at a single geographical level. Hence when French multinationals make subsidiary location decisions, they still strongly differentiate between host countries by their wage levels and between regions by their agglomeration effects and market potential. Moreover, agglomeration effects, demonstrated once again here, can be used to check the pertinence of attractiveness policies based on the existence or strengthening of intra-industrial regional hubs.