Multinational Enterprise locations: A European Study

This paper analyses the complex location decision for multinational firms who situated outside of their parent country. Besides the extensively researched effects of economic factors, this study also explores the effects of some social variables on the number of foreign controlled enterprises (FAT) across 21 European host countries, over the period 2006-2009. As theoretically predicted, the tax rate has a negative effect on the number of FATs per country. The size of the country in GDP, low wages, a skilled labour force, and the importance of university education in the hosting country has a positive effect on the number of FATs. Inconclusive results are obtained on the effects of the number of foreign languages spoken per tertiary educated person, as the data shows a surprising negative effect of this variable on the number of FATs. The results regarding the effect of the percentage of the population with a tertiary education also display an astounding negative relationship.