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Agglomeration, regional grants and firm location

Devereux, MP; Griffith, R; Simpson, H; (2004) Agglomeration, regional grants and firm location. (IFS Working Papers W04/06 ). The Institute for Fiscal Studies, UCL (University College London), The Institute for Fiscal Studies: London, UK. Green open access

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Abstract

We examine whether discretionary government grants influence the location ofnew plants, and how effective these incentives are in the presence of agglomeration andurbanisation externalities. We find evidence that regional industrial structure affects thelocation of new entrants. Firms in more agglomerated industries locate new plants near toothers in the same industry. Firms are also attracted to industrially diversified locations.Foreign multinationals locate new plants near to other foreign-owned plants in the sameindustry. Fiscal incentives in the form of grants are found to have some effect in attractingplants to specific geographic areas eligible for such aid. We examine whether discretionary government grants influence the location ofnew plants, and how effective these incentives are in the presence of agglomeration andurbanisation externalities. We find evidence that regional industrial structure affects thelocation of new entrants. Firms in more agglomerated industries locate new plants near toothers in the same industry. Firms are also attracted to industrially diversified locations.Foreign multinationals locate new plants near to other foreign-owned plants in the sameindustry. Fiscal incentives in the form of grants are found to have some effect in attractingplants to specific geographic areas eligible for such aid.

Type: Report
Title: Agglomeration, regional grants and firm location
Open access status: An open access version is available from UCL Discovery
Additional information: Imported via OAI, 7:29:01 23rd Mar 2007
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/2899
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