Foreign direct investment - Location attractiveness for retailing firms in the European Union

Ghauri, Pervez N.; Elg, Ulf; Sinkovics, Rudolf R.

Abstract

Abstract for the Book: The purpose of the volume is to analyze the impact of European Union on inward foreign direct investment in Europe and to discuss what type of effects are being created by this race for FDI. The volume deals with two levels of discussion: First, by looking at the policy issues as addressed by the EU authorities and incentive regimes exercised in single countries by local governments. Second, by looking at company strategies towards location selection and whether there is a trend towards concentration in some countries or regions. Although academically it is still under discussion, most countries believe that inward foreign direct investment is beneficial for local economies. It is considered positive not only for job opportunities but also for tax income, technological development and competitiveness of local firms. Countries thus create different type of incentives for foreign firms, such as; direct incentives/subsidies, tax relief, soft loans and preferred handling. This race for attracting inward FDI has been intensified in the European Union. However, there has hardly been any research to understand the impact of EU on the competition among EU-countries to attract FDI. This volume will investigate whether there is such a race or not and provide evidence from different countries. // Abstract for the Chapter: Foreign direct investment and company's location decisions in Europe have attracted much attention from competitors, consumers, academics and governments. Empirical evidence has been provided in the literature with particular attention given to manufacturing investments. The main thrust in the study of this "race for FDI" has been the relationship between competition and trade policy, regional development, employment generation and industrial regeneration (Oxelheim 1993). From an academic perspective it appears worthwhile to investigate in how far the increase in the importance of the service sector is also reflected in the attention it is given with respect to attracting service-FDI. We particularly look into retailing companies because during the last decade, retailing has rapidly become more and more internationalised and retailing firms are creating high levels of value-added by means of domestic job-creation and local purchasing. Literature also suggests that the retail internationalisation process is idiosyncratic, related to retail-specific advantages, dimensional factors and management factors (Alexander 1990; Vida 2000; Vida, Reardon, and Fairhurst 2000). Successful retail expansion involves the development of a set of network contacts with different actors and interest groups on that market, as well as good relationships with suppliers and other business partners. Furthermore, a solid understanding of the market in terms of consumer demands, the competitors and their strengths and weaknesses, legal and political factors, etc. is required.

Citation

Ghauri, P. N., Elg, U., & Sinkovics, R. R. (2004). Foreign direct investment - Location attractiveness for retailing firms in the European Union. In P. N. Ghauri, & L. Oxelheim (Eds.), European Union and the Race for Foreign Direct Investment in Europe (407-428). Pergamon

• Publication Date: 2004
• Deposit Date: Mar 31, 2025
• Pages: 407-428
• Book Title: European Union and the Race for Foreign Direct Investment in Europe
• ISBN: 0080442455
• Keywords: FDI, foreign direct investment,
• Public URL: https://durham-repository.worktribe.com/output/2772763