Choice of Location and the Roles of Foreign Subsidiaries: Evidence from UK Regions

In this paper we investigate the location determinants of inward foreign direct investment (FDI) in the UK at a regional level. The paper focuses on a relatively under investigated field, that of the linkage between choice of regional location- within a particular host countryand subsidiary roles. The key contribution steaming from this analysis is that we provide, for the first time, detailed support of the location factors affecting distinctive types of subsidiaries. The external environment affects differently the two types of subsidiaries under investigation with agglomeration features playing the most significant role. At the same time idiosyncratic FDI factors do seem to play the most important role for both types of subsidiaries. Important policy implications are then raised, regarding the design of welltargeted FDI promoting policies aiming both at upgrading regional potential as well as specific sectors and companies.