- More practically, since the collection of data for regions requires a lot of effort, we wanted to start
such an analysis with a small number of regions to examine the results and enrich the work in the
future with other European regions.
The core of our analysis is basically disentangling the importance of the general business
climate and environment in attracting investment. Our idea is unifying the usual separated view
between macro and micro factors affecting FDI for a sample of European regions. Our results prove
that a measure of regional productivity as well as local wealth may be important variables at the time
to choose a destination, but not in al situations.
The remaining of this study is organized as follows. In Section 2, we provide a brief overview
of the FDI trends for a group of regions. In Section 3, we propose some descriptive statistics on
potential FDI determinants. Then, in Section 4, we run a few econometric estimations to quantify
statistically the determinants of FDI by regions. Our results confirm the findings of other studies
realized at national level concerning the importance of productivity, local wealth and business climate.
Section 5 concludes.
2. Foreign direct investment in three European regions:
Baden-Württemberg, Catalunya and Lombardia
In our sample of regions, the performance of FDI inflows per capita is the highest in Baden
Württemberg and the lowest in Catalunya. In particular, Catalunya underperformed in relative terms
between 1999 and 2003. It seems that it did not fully take advantage of the euro context and the world
FDI boom of this period. Before 1999 Lombardia did not attract more FDI inflows than Catalunya.
After 1999 Lombardia experienced a net increase in FDI inflows following the world upward trend.
Lombardia may have benefited from the euro-effect more than Catalunya. The euro meant for Italy
currency and interest rate stability, an important criterion for foreign investors (Figure 1).
C Catalunya —■—Baden Württemberg
—⅛—Lombardia
Figure 1: FDI inflows per capita
(source: regional statistical offices - calculus: authors)
♦ Catalunya —■—Baden Württemberg
—⅛—Lombardia
Figure 2: FDI outflows per capita
(source: regional statistical offices - calculus: authors)