Regional social context and FDI. An empirical investigation on Chinese acquisitions in Europe

Abstract European regions are characterized by different economic, technical and social conditions. Such differences might also explain the different strength of European regions in attracting foreign direct investments (FDI). Following recent strands of literature, in this paper we try to identify whether the presence of regional differences in the social context, once considering a set of regional characteristics related to the economic structure and innovative endowments, affects the location of multinational enteprises. To do so, we develop an empirical model using data on Chinese brownfield investments towards European regions. Our results confirm that social context overall matters in location choices, even if heterogeneous effects arise when taking into account technological differences in target sectors. Our evidence is useful in increasing the awareness of policy-makers and of the academic debate on the necessity to consider possible spillover and backlash effects both of social policies and of FDI attraction initiatives.