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Location choice of German multinationals in the Czech Republic

Economics of Transition / The Economics of Transition

Published online on

Abstract

This paper analyzes the location choice of German investors in the Czech Republic based on a unique dataset covering all Czech companies with a German equity holder. Using a nested logit approach the impact of agglomeration economies, labour market conditions and distance on location choice is investigated. The main result of the paper is that apart from a low distance to the location of the parent company the attractiveness of a Czech district for German investors is mainly driven by agglomeration economies. Besides localization economies the agglomeration of German companies in a region plays a decisive role. The importance of labour market characteristics differs between investment sectors, sizes and periods.