Industrial location, spatial discrete choice models and the need to account for neighbourhood effects

Abstract

This research, following the original contributions of Vichiensan et al. (J East Asia Soc Trans Stud 6:3789–3802, 2005) and Autant-Bernard (Eur Plan Stud 14:1187–1208, 2006), employs a spatial conditional logit framework in order to explore the role that inter-territorial spillovers play in driving the location choices of industrial firms. After introducing neighbourhood effects into the theoretical model, we test the methodology using data on 8,429 firms established in the municipalities making up the Spanish region of Murcia. Our results show that human capital, agglomeration economies and industrial land availability are the main factors driving entrepreneurs’ decisions. Estimates of the spatial component of the model indicate that spillovers or externalities taking place between municipalities (inter-territorial spatial effects) have a remarkable influence on the location decisions of the firms, thus confirming the need to account for such spatial dependence pattern when studying location decisions of industrial companies at a local level.