Multinationals' Location Choice, Agglomeration Economies, and Public Incentives

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Abstract
We study the regional location decision of multinationals in Ireland since the 1970s by focusing on the role played by agglomeration economies and by a distinct change in regional policy intent on dispersing industrial activity to the more disadvantaged areas of Ireland. We find that regional policy has only been effective in attracting low-tech firms to the disadvantaged areas during the time when there was a more indirect approach to regional policy. Our results also show that hi-tech firms spread more evenly across the country and that urbanization economies were for these firms a more important locational determinant than public incentives.

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