International relocation of production: where do firms go?
Sleuwaegen, Leo Pennings, Enrico
Sleuwaegen, Leo
Pennings, Enrico
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Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2006
Journal
Scottish Journal of Political Economy
Book
Publication Volume
53
Publication Issue
4
Publication Begin page
430
Publication End page
446
Publication Number of pages
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Abstract
The flexible relocation of capacity across countries by multinational enterprises has become an important source of concern. Using a unique sample of relocating firms in Belgium, we find that wages and market potential of host regions are important determinants for the location choice. Considering firm characteristics, we show that large firms have a higher propensity to relocate to remote countries. Public aid only plays a decisive role in the investment decision for relocations to adjacent countries, suggesting a potential harmful role in distorting competition. More proactive policies in line with changing comparative location advantages should be implemented to accommodate relocations.
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Keywords
Strategic Context & International Business