Marialena Petrakou, Randolph Bruno (p), Nicholas Phelps

This paper contributes to our knowledge and our theoretical understanding of the impact of FDI at the regional level within the European Union. It posits that the notion of absorptive capacity at the regional level could emphasize the role of local factors moderating the impact of FDI on regional growth. By using firm level data aggregated to the regional level and employing a newly constructed dataset, the paper shows that FDI can be considered an important ingredient to boost regional growth. Using both panel fixed effects and Generalized Methods of Moments (GMM), the paper supports the hypothesis that FDI spillovers materialize when the region has well-developed financial markets system to absorb FDI externalities.

Chiara Piccardo (p), Angelo Zago

This study examines factors that might affect inward FDI (Foreign Direct Investments). More in detail, we study how and to what extent firm-level and local characteristics impact on the inward FDI in Italy, over the period 2006-2014.
Using alterative definitions of foreign firms, we qualify firms receiving FDI in each year, as those firms that become foreign in year t (and was national in year t-1). We compare firms receiving FDI with national firms in each relevant year (2006-2014) in terms of their performance, using univariate kernel density estimations, and we estimate the probability that a firm receives FDI with a more standard parametric setting by applying Probit models. Looking at the firms' characteristics that affect inward FDI, our evidences seem to suggest that foreign investors in Italy mainly pursue "lemon-picking" strategies by investing in more productive, even if less profitable, firms. The evidences on the role of the local factors seem to suggest that the aim of the foreign investors is to penetrate the Italian local market mostly through market-seeking FDI, rather than export-oriented FDI. Moreover, distinguish between firms receiving "financial" and "non-financial" FDI, according to the type of their global ultimate owners, we show how factors that affect inward FDI vary according to the type of investment.


see extended abstract

Anna D'ambrosio (p)

Thirty years after German re-unification, can Germany be regarded to be a single economy?
During the years of the global financial downturn, Germany has been the main driver of the recovery of the European Union. Its attractiveness for Foreign Direct Investments (FDI) has been growing steadily over the last three decades. Nonetheless, the increasing importance of FDI inflows over the last three decades may be viewed to be a largely West-German phenomenon.
In previous studies, the location choice of FDI was shown to be substantially heterogeneous between Western and Eastern Germany, with Eastern Germany attracting substantially less investments even controlling for a wide set of observable location factors. The presence of a significant, and negative, ``East" effect suggests that re-unification was lagging even about 20 years after re-unification to an extent that was not explained by observable location factors.
We construct a unique dataset linking data about greenfield FDI from fDi Markets (from the Financial Times Intelligence unit) to data about several possible location factors in German NUTS2 regions collected from the regional database of the German Statistical Office and of the statistical offices of the German federal states.
We implement two types conditional logit and set nested logit models, where the nests are represented by West and East Germany. A simple measure of the persistence of an ``East effect" is offered by an ``East" dummy in a standard conditional logit model of location choice, and by the ``inclusive parameter" in a simple nested model constructed to recognize a possible hierarchy in the location choice faced by foreign investors: first they choose whether to locate in Eastern or Western Germany; second, where to locate within each nest. We study how the ``East" dummy and the inclusive parameter change over a 15-year window from 2003 to 2017.
Preliminary results indicate that, while the main determinants have the expected signs and remain considerably stable over time, the East-Germany coefficient displays a substantial change in the post-2010 sub-period. Until 2010, the coefficient of ``East" remains negative and significant, confirming that NUTS2 regions in Eastern Germany were considered as a less attractive location for FDI. From 2011 on, instead, the coefficient of East is no longer significantly negative and becomes positive but insignificant. This finding may be viewed as an indication that, from 2011 on, investors no longer regard NUTS2 regions in Eastern Germany to represent substantially heterogeneous destinations for their investments.