Spatial characteristics of foreign direct investments

The last decades we have seen the development of a global economy with international networks of firms, people and cities. One of the main characteristics of multinational enterprises, is the split of their firm activities in separate divisions over different countries to profit from either ownership, location, or internalization (e.g. of knowledge) benefits in the destination country. These foreign direct investments (FDI) play an important role in the development of cities and their international ties in the global network. Within this global economy cities are competing over the attraction of this FDI-capital and firms, the knowledge, and the high educated people. Although capital brings immediate benefits through investments, the presence of firms, knowledge and highly educated people brings competitiveness and benefits on the long term. Many theories and studies have focussed on the competitive characteristics of cities and attraction of FDI, firms and people to these cities. Many stress the importance of accessibility and international infrastructure, the knowledge and creativity of the people, and institutional and organizational aspects. Other studies stress the importance of developing local or regional industries and knowledge clusters, being influenced by face-to-face-contacts, tacit knowledge-spillovers and interaction. However, almost none of the studies focussed on the spatial characteristics of the locations of firms and cities. Locations bring characteristics of proximity, functionality, urbanity and quality to the firm and they ameliorate the interaction environments of these districts. Focussing on these aspects gives insight in the spatial needs and determinant of firms. Besides scientific relevance, this study is centered on policy recommendations for the city of Rotterdam. The city is in transition to a more knowledge based economy and is developing it’s economic and spatial strategy to be more competitive, both in local clusters of knowledge in different sectors as well as global networks of cities. However, these strategies are not yet related to spatial developments and the spatial needs of firms. This study aims to show insight in the characteristics of business districts and cities for different knowledge intensive firm activities, in order to develop spatial-economic policies for municipalities. In this study, data of fDi Markets is used to analyse trends of FDI in knowledge intensive activities over the years 2003-2012, in six North- and West-European countries. For 15 cities in the league of Rotterdam (same number of investments) the FDI for the knowledge intensive activities was geo-mapped and the characteristics of these locations recorded, e.g. aspects of proximity / accessibility, functional districts, urban characteristics and spatial quality. Analyses of the data resulted in findings on spatial determinants for FDI in specific activities. Based on these data a classification of business districts was set up, with 7 distinctive districts characterized by their proximity to either city-centre, airport or university, and characteristics in urban, functional and quality aspects. Regression analysis showed that availability of certain districts is related to the presence of specialised firm activities. Development of a coherent spatial-economic strategy for a city should identify the activities and sectors the strategy is aimed at. Further the strategy should focus on development of the right type of business districts with the characteristics these activities need. Allover the study shows that international access by air is one of the most important conditions for the development of a strong business environment in a city regarding KI FDI.