Abstract
In 2017–2018, Seattle-based Tech behemoth Amazon executed a highly publicised location-finding process for a $5 billion investment project, dubbed ‘HQ2’. Owing to the combination of high investment volume and the company’s unique public exposure, the HQ2 process is on course to becoming a basic yardstick for future foreign direct investment (FDI) projects all over the world. This article compiles the company’s previously unpublished site selection criteria and develops an evidence-based system of investment decision arguments which is employed to test the currently dominant approaches in location decision theory—behavioural, neoclassical, and institutional. Our results identify gaps vis-à-vis this emerging ‘Gold Standard’ and we propose the addition of a fourth, project-oriented approach to theory to fill the detected shortcomings. Furthermore, this system equips policymakers with a tool to evaluate their investment attraction strategies based on the decision criteria extracted from the HQ2 process.
Highlights
In a market-based economy, local economic development depends on the potential to attract business investments from within or abroad
We will base our analysis on two documents prepared by Amazon in the course of the HQ2 location decision: the widely shared request for proposals (RFP) (Amazon, 2017) and the confidential Request for Information (RFI)
We base two propositions on these results: (1) We put forward a new group of factors that should be integrated into location decision theory as a fourth approach and (2) we provide policymakers with a simple tool to evaluate and discuss their investment promotion strategies
Summary
In a market-based economy, local economic development depends on the potential to attract business investments from within or abroad. Location theory offers a way to describe and formalize this potential by proposing a set of criteria, or ‘location factors’: They are where place-based policies meet investors’ interests, where location theory meets business practice. We base our analysis on one of the global technology sector’s largest and best-documented investment projects of the late 2010s, US e-commerce giant Amazon’s quest for a location for its second headquarters ( referred to as HQ2). Following Liu and Muro (2017), we interpret this project as a signal of what investors consider state-of-the-art in urban economic de-. Cities and regions that want to attract business investments from the tech-sector will have to deal with similar requests from potential investors
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