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Keywords:

  • Agglomeration economies;
  • location choice;
  • foreign firms;
  • Polish regions

Abstract

The goal of this paper is to study empirically the determinants of foreign firms' location in Polish regions with a special focus on the role of firm size. To derive testable hypotheses on the firm location choice an analytical framework that combines the firm heterogeneity and the new economic geography literatures is used. In this framework, agglomeration economies, technical infrastructure, and labour market characteristics may affect location decisions of foreign investors. The hypotheses derived from the theory are validated empirically using the regional dataset at NUTS 2 level of spatial aggregation for the period 1999–2010. The empirical evidence confirms the existence of firm heterogeneity with respect to the determinants of firm location choice.