Thursday 4 March 2010

Foreign Direct Investment

Let me bring one element into the discussion initiated by Pedro. Many empirical papers show the importance of "agglomeration economies" for firm location. In other words, belonging to the so-called periphery of Europe and being physically distant from the richer markets is a very strong handicap for the Portuguese economy. Does this make it impossible to attract FDI? No, wise policies can still play a role here, but it is definitely much more expensive to do it for Portugal than for a Core EU region.

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