How important are agglomeration economies for the location of foreign manufacturing plants? We investigate this question by combining innovations from previous studies and by taking advantage of a quasi-experimental setting: the political and economic transition in Romania. The recent, sudden...

This paper presents a simple framework in which the location and the growth rate of economic activities are endogenous and interact. We show that the nature of the equilibrium and of the relation between growth and location depends fundamentally on whether capital is assumed to be mobile (in...