Modelling European regional FDI flows: A spatial perspective

The project will provide a first analysis of origin- and destination-specific FDI flows in European subnational regions using a spatially augmented gravity model. While previous empirical research primarily focussed on country-specific FDI patterns, this proposal aims at using a novel data set to model FDI flows among European subnational regions. Due to the granularity of the data, spatial spill-over structures can be analysed in more detail. The project moreover aims to improve existing spatially augmented interaction models by novel Bayesian hierarchical estimation approaches to obtain more robust and flexible parameter estimates. Additionally, the flexibility of the approach considers both origin- and destination-specific economic characteristics in order to isolate multilateral spatial interrelationships of European regional FDI activities.