Geographical boundaries of external and internal agglomeration economiesLavoratori, K. ORCID: https://orcid.org/0000-0002-0078-4525 and Piscitello, L. (2021) Geographical boundaries of external and internal agglomeration economies. In: Colombo, S. (ed.) Spatial Economics Volume II. Palgrave Macmillan, pp. 221-250. ISBN 9783030400941 Full text not archived in this repository. It is advisable to refer to the publisher's version if you intend to cite from this work. See Guidance on citing. To link to this item DOI: 10.1007/978-3-030-40094-1_8 Abstract/SummaryThis chapter analyses the role of traditional factors associated with Marshallian and Jacobsian economies (i.e. external agglomeration) and the role of factors associated to the intra-firm co-location of activities (i.e. internal agglomeration) in influencing location decisions of multinational enterprises (MNEs) within a foreign country. Our empirical analysis considers the location decision of 447 new greenfield investments in manufacturing activities by 384 foreign MNEs in Italy, throughout the period 1998–2012, at a sub-national NUTS-3 level. Findings from a conditional logit model confirm that (1) both external and internal agglomeration economies have a strong effect on MNEs’ location decisions and (2) once allowing for intra-firm co-location, the influence of external forces decreases. Additionally, results obtained through spatial econometrics techniques show a strong spatial decay effect both for the effects associated with intra-firm co-location in contiguous provinces and for the traditional Marshallian forces. Conversely, the benefits of diversity (Jacobsian economies) cross province geographical boundaries.
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