Determinants of Location Choices by Multinational Firms: A Review of the Current State of Knowledge

Winkelmann, Rainer and Klaus F. Zimmermann (Eds.) (2005) Can Germany Stand Up to International Locational Competition? ISBN 978-3-428-11961-5We provide in this paper a survey of recent empirical evidence concerning the determinants of location choices by multinational firms for their production affiliates. While the concerns about delocation/offshoring of manufacturing activities have been dominated by the belief that low production costs or taxes are the main drivers of attractiveness, the inspection of rigorous econometric work reveals that those “fear-factors” of location are largely dominated by the desire to be close to consumers and suppliers and to follow the choices of competitors