Local determinants of foreign direct investment in Poland: the role of relative distance
DOI:
https://doi.org/10.24136/eq.2018.004Keywords:
foreign direct investment, location determinants, spatial distribution of FDI, distance, special economic zonesAbstract
Research background: The increasing role of foreign direct investments (FDI) in global, national, regional, and local economies draws the public?s attention to the criteria utilised by foreign investors in undertaking locational decisions, owing to the mostly stimulating character of these kinds of investments.
Purpose of the article: The aim of the article is to identify the local determinants of FDI distribution. Particular attention is put on the role of distance to: (i) various transport endowments; (ii) next special economic zone; (iii) different national borders, among other motives studied in empirical papers.
Methods: An important value added over the existing studies is the use of continuous variables representing distances (in km) to selected points of interest (e.g., airport) or minimum distances to lines (i.e., border, road) instead of dummy variables indicating whether particular infrastructure endowment is present in a region. The estimations were run in STATA 14.2 software with the use of a negative binomial approach.
Findings & Value added: The results present new empirical evidence on FDI determinants witnessed at a local level of analysis (LAU 1), fitting into the other research done at a higher level of data aggregation (NUTS 2, NUTS 3), signalling high intra-regional inequalities and the role of: (i) relative distance to various infrastructure endowments; (ii) heterogeneous border effects; and (iii) the importance of close proximity to special economic zones. Given the presence of counties? auto selection process (i.e., better developed, endowed, urbanised, favourably located) done by FDI investors, we formulate universal implications in terms of FDI promotion policy.
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References
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Villaverde, J., & Maza, A. (2012). Foreign direct investment in Spain: regional distribution and determinants. International Business Review, 21(4). doi: 10.1016/j.ibusrev.2011.08.004.
Villaverde, J., & Maza, A. (2015). The determinants of inward foreign direct investment: evidence from the European regions. International Business Review, 24(2). doi: 10.1016/j.ibusrev.2014.07.008.
Wang, J. (2013). The economic impact of special economic zones: evidence from Chinese municipalities. Journal of Development Economics, 101. doi: 10.1016/j.jdeveco.2012.10.009.
Źróbek-Różańska, A., Trojanek, M., & Źróbek, S. (2014). Local authorities? activities aiming at attracting private investments: effects, barriers, opportunities. Actual Problems in Economics, 6.
Ambroziak, A. A. (2016). Income tax exemption as a regional state aid in special economic zones and its impact upon development of Polish districts. Oeconomia Copernicana, 7(2). doi: 10.12775/OeC.2016.015.
Blanc-Brude, F., Cookson, G., Piesse, J., & Strange, R. (2014). The FDI location decision: distance and the effects of spatial dependence. International Business Review, 23(4). doi: 10.1016/j.ibusrev.2013.12.002.
Brodzicki, T. (2012). On the signalling effect of clusters: clusterization and inflow of FDI into Polish NUTS-2 regions. Czech Journal of Social Science, Business and Economics, 1.
Brodzicki, T., & Umiński, S. (2017). A gravity panel data analysis of foreign trade by regions: the role of metropolises and history. Regional Studies, 11(1). doi: 10.1080/00343404.2017.1296123.
Chen, Y. (2009). Agglomeration and location of foreign direct investment: the case of China. China Economic Review, 20(3). doi: 10.1016/j.chieco.2009.03.005.
Chidlow, A., Salciuviene, L., & Young, S. (2009). Regional determinants of inward FDI distribution in Poland. International Business Review, 18(2). doi: 10.1016/j.ibusrev.2009.02.004.
Cieślik, A. (2005a). Regional characteristics and the location of foreign firms within Poland. Applied Economics, 37(8). doi: 10.1080/00036840500061087.
Cieślik, A. (2005b). Location of foreign firms and national border effects: the Case of Poland. Tijdschrift voor Economische en Sociale Geografie, 96(3). doi: 10.1111/j.1467-9663.2005.00460.x.
Cieślik, A. (2013). Determinants of the location of foreign firms in Polish regions: does firm size matter? Tijdschrift voor economische en sociale geografie, 104(2). doi: 10.1111/tesg.12017.
Cieślik, A., & Ryan, M. (2005). Location determinants of Japanese multinationals in Poland: do special economic zones really matter for investment decisions? Journal of Economic Integration, 20(3). doi: 10.11130/jei.2005.20.3.475.
Crozet, M., Mayer, T., & Mucchielli, J.-L. (2004). How do firms agglomerate? A study of FDI in France. Regional Science and Urban Economics, 34(1). doi: 10.1016/S0166-0462(03)00010-3.
Csomós, G. (2017). Cities as command and control centres of the world economy: an empirical analysis, 2006?2015. Bulletin of Geography. Socio-economic Series, 38(38). doi: 10.1515/bog-2017-0031.
Damborský, M., Wokoun, R., & Krejcová, N. (2013). The effectiveness of industrial zones support in the Czech republic. E+ M Ekonomie a Management, 4.
Faria, J. R. (2016). Location clusters, FDI and local entrepreneurs: consistent public policy. Journal of the Knowledge Economy, 7(4). doi: 10.1007/s13132-015-0272-5.
Friedman, J., Gerlowski, D. A., & Silberman, J. (1992). What attracts foreign multinational corporations? Evidence from branch plant location in the United States. Journal of Regional Science, 32(4). doi: 10.1111/j.1467-9787.1992. tb00197.x.
Gauselmann, A., & Marek, P. (2012). Regional determinants of MNE?s location choice in post-transition economies. Empirica, 39(4). doi: 10.1007/s10663-012-9200-0.
Glickman, N. J., & Woodward, D. P. (1988). The location of foreign direct investment in the United States: patterns and determinants. International regional science review, 11(2). doi: 10.1177/016001768801100203.
Guimar?es, P., Figueiredo, O., & Woodward, D. (2000). Agglomeration and the location of foreign direct investment in Portugal. Journal of Urban Economics, 47(1). doi: 10.1006/juec.1999.2138.
Hecht, V. (2017). Location choice of German multinationals in the Czech Republic. Economics of Transition, 25(4). doi: 10.1111/ecot.12131.
Jáč, I., & Vondráčková, M. (2017). The perception of selected aspects of investment attractiveness by businesses making investments in the Czech Republic. E+M Ekonomie a Management, 20(3). doi: 10.15240/tul/001/2017-3-008.
Jones, J., & Wren, C. (2015). Does service FDI locate differently to manufacturing FDI? A regional analysis for Great Britain. Regional Studies, 50(12). doi: 10.1080/00343404.2015.1009434.
Kisiel, R., Krajewska, A., & Nazarczuk, J. M. (2017). Spatial concentration of businesses with foreign capital in the capital cities of the Polish voivodeships and their agglomerations from 1995?2016. Acta Scientiarum Polonorum - Oeconomia, 16(4). doi: 10.22630/ASPE.2017.16.4.46.
Lizińska, W. (2009). Benefits of foreign capital inflow in the form of direct investments and activities of local authorities in attracting it. Olsztyn Economic Journal, 4(2). doi: 10.2478/v10021-009-0015-1.
Nazarczuk, J. M. (2015). Regional distance: the concept and empirical evidence from Poland. Bulletin of Geography. Socio-economic Series, 28(28). doi: 10.1515/bog-2015-0020.
Nazarczuk, J. M., & Umiński, S. (2018a). The geography of openness to foreign trade in Poland: the role of special economic zones and foreign-owned entities. Bulletin of Geography. Socio-economic series, 38. doi: 10.2478/bog-2018-0007.
Nazarczuk, J. M., & Umiński, S. (2018b). The impact of special economic zones on export behaviour. Evidence from Polish firm-level data. E+ M Ekonomie a Management, XXI(3).
Schäffler, J., Hecht, V., & Moritz, M. (2016). Regional determinants of German FDI in the Czech Republic: new evidence on the role of border regions. Regional Studies, 51(9). doi: 10.1080/00343404.2016.1185516.
Simone, E. de, & D?Uva, M. (2017). Social support, industrial parks and FDI location choice across Hungarian counties. Social Indicators Research, 133(3). doi: 10.1007/s11205-016-1403-5.
Taylor, Z., & Ciechański, A. (2015). Control functions within large cities and foreign direct investment in the transport sector: empirical evidence from Poland. Geographia Polonica, 88(4). doi: 10.7163/gpol.0034.
Villaverde, J., & Maza, A. (2012). Foreign direct investment in Spain: regional distribution and determinants. International Business Review, 21(4). doi: 10.1016/j.ibusrev.2011.08.004.
Villaverde, J., & Maza, A. (2015). The determinants of inward foreign direct investment: evidence from the European regions. International Business Review, 24(2). doi: 10.1016/j.ibusrev.2014.07.008.
Wang, J. (2013). The economic impact of special economic zones: evidence from Chinese municipalities. Journal of Development Economics, 101. doi: 10.1016/j.jdeveco.2012.10.009.
Źróbek-Różańska, A., Trojanek, M., & Źróbek, S. (2014). Local authorities? activities aiming at attracting private investments: effects, barriers, opportunities. Actual Problems in Economics, 6.
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Published
2018-03-31
How to Cite
Nazarczuk, J. M., & Krajewska, A. (2018). Local determinants of foreign direct investment in Poland: the role of relative distance. Equilibrium. Quarterly Journal of Economics and Economic Policy, 13(1), 73–88. https://doi.org/10.24136/eq.2018.004
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