Capital allocation in the Greek regions

The present study analyses the location of new economic activities in the 51 Greek prefectures (NUTS III level) as the outcome of agglomeration economies and other factors that are acknowledged as determinants of new firm location. Cross-section data referring to the location choices of firms in manufacturing, commerce, services and tourism within 2005 are used. Results indicate that agglomeration effects largely determine a region’s attractiveness and appropriateness as an investment location. In addition, the effect of other factors such as demand, expected profit and cost conditions is identified as important. Interestingly, regional characteristics seem to affect in different ways the location of start-ups belonging to different industries.