Sectoral determinants of the location choice of MNCs

Abstract

This thesis examines the determinants of multinational companies (MNCs)’ location choices estimating conditional or nested logit model using a dataset of more than 17,000 firms invested in 38 developing countries over the period 1980-2004. In addition, this dataset has an exceptional feature – it allows identifying the sectors that these firms invest in. The sectoral analysis is undertaken both at 2-digit ISIclassification and aggregate level where sectors are lumped according to their tradability or technology intensity. The empirical results suggest that the determinants of the probability that a MNC invests in a particular country vary across sectors. Thus, the sectoral composition of FDI is essential for understanding its economic geography.