Foreign direct investments: location choices across the value chain
Until the end of the 20th century, the global economy still suffered from trade and investment barriers due to economic nationalism. As this nationalism eroded, firms benefited from the effect of this liberalisation on their worldwide trade. Other important evolutions include the information technology and transportation developments
Due to significant quality improvements and considerably lower costs, the establishment of a real worldwide firm became possible and affordable.
Mainly due to the economic liberalisation and the IT revolutions, global firms tend to not locate their entire value chain in one country anymore. They try to generate strategic advantages or cost benefits by sourcing activities of the value chain towards different countries.
The report therefore analyses firms in terms of single business activities. By connecting the specific location needs of each activity to a country’s relative strength of each activity, the relative location advantage of the activity can be determined. These finding are enclosed in an innovative framework which reveals the strengths and weaknesses of each country in the attraction of business activities.
The purpose of this project is to give stakeholders that are involved in developing the new long term vision on Flanders’ attractiveness for foreign investments some essential insights into the latest evolutions in international business and economic geography, as well as of Flanders’ changing position. This report is the second of two reports on this topic.