University of Groningen. Firm relocation and regional policy Mariotti, Ilaria

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1 University of Groningen Firm relocation and regional policy Mariotti, Ilaria IMPORTANT NOTE: You are advised to consult the publisher's version (publisher's PDF) if you wish to cite from it. Please check the document version below. Document Version Publisher's PDF, also known as Version of record Publication date: 2005 Link to publication in University of Groningen/UMCG research database Citation for published version (APA): Mariotti, I. (2005). Firm relocation and regional policy: A focus on Italy, the Netherlands and the United Kingdom s.n. Copyright Other than for strictly personal use, it is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), unless the work is under an open content license (like Creative Commons). Take-down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Downloaded from the University of Groningen/UMCG research database (Pure): For technical reasons the number of authors shown on this cover page is limited to 10 maximum. Download date:

2 Firm relocation and regional policy

3 Nederlands Geografische Studies / Netherlands Geographical Studies Redactie / Editorial Board Drs. J.G. Borchert (Editor in Chief) Prof.Dr. J.M.M. van Amersfoort Dr. H.J.A. Berendsen Dr. P.C.J. Druijven Prof.Dr. A.O. Kouwenhoven Prof.Dr. H. Scholten Plaatselijke Redacteuren / Local Editors Drs. R. van Melik, Faculteit Geowetenschappen Universiteit Utrecht Dr. D.H. Drenth, Faculteit Beleidswetenschappen Katholieke Universiteit Nijmegen Dr. P.C.J. Druijven, Faculteit der Ruimtelijke Wetenschappen, Rijksuniversiteit Groningen Drs. F.L.P.M. Kwaad, Fysisch-Geografisch en Bodemkundig laboratorium Universiteit van Amsterdam Dr. L. van der Laan, Economisch-Geografisch Instituut Erasmus Universiteit Rotterdam Dr. J.A. van der Schee, Centrum voor Educatieve Geografie Vrije Universiteit Amsterdam Dr. F. Thissen, Instituut voor Sociale Geografie Universiteit van Amsterdam Redactie-Adviseurs / Editorial Advisory Board Prof.Dr. G.J. Ashworth, Prof.Dr. P.G.E.F. Augustinus, Prof.Dr. G.J. Borger, Prof.Dr. K. Bouwer, Prof.Dr. J. Buursink, Dr. C. Cortie, Dr. J. Floor, Prof.Dr. G.A. Hoekveld, Dr. A.C. Imeson, Prof.Dr. J.M.G. Kleinpenning, Dr. W.J. Meester, Prof.Dr. F.J. Ormeling, Prof.Dr. H.F.L. Ottens, Dr. J. Sevink, Dr. W.F. Sleegers, T.Z. Smit, Drs. P.J.M. van Steen, Dr. J.J. Sterkenburg, Drs. H.A.W. van Vianen, Prof.Dr. J. van Weesep ISSN

4 Netherlands Geographical Studies 331 Firm relocation and regional policy A focus on Italy, the Netherlands and the United Kingdom Ilaria Mariotti Utrecht/Groningen 2005 Royal Dutch Geographical Society / Department of Spatial Sciences University of Groningen

5 Deze publicatie werd verdedigd als academisch proefschrift aan de Rijksuniversiteit Groningen op 30 juni 2005 Promotor: Beoordelingscommissie: Prof. dr. P.H. Pellenbarg Prof. dr. J. van Dijk Prof. dr. L.G.J. van Wissen Prof. dr. O.A.L.C. Atzema ISBN Copyright Faculteit der Ruimtelijke Wetenschappen, Rijksuniversiteit Groningen, 2005 Niets uit deze uitgave mag worden vermenigvuldigd en/of openbaar gemaakt door middel van druk, fotokopie of op welke andere wijze dan ook zonder voorafgaande schriftelijke toestemming van de uitgevers All rights reserved. No part of this publication may be reproduced in any forms, by print or photoprint, microfilm or any other means, without written permissen by the publishers. Gedrukt door het Grafisch Centrum, Rijksuniversiteit Groningen Voorkant: pentekening K.D. Schönfeld

6 CONTENTS Figures 8 Tables 9 1 Introduction The research problem Defining firm relocation Objective, research questions and hypotheses Objective Research questions and hypotheses Scientific and social relevance Research design Methodology Overview of the chapters 24 2 Theoretical framework Introduction The neoclassical approach The behavioural approach The institutional approach The evolutionary approach Comparison and conclusions 32 3 Regional policies and their impact on firm relocation: an overview Introduction The traditional approach The contemporary approach The influence of EU competition, structural and cohesion 43 policies on national policies 3.5 Conclusions 44 4 Firm relocation: a survey Introduction From 1945 to the 1970s Industrial decentralisation Industrial suburbanisation From the 1980s to the present 52 5

7 4.3.1 Intra-regional moves International moves New research interests Conclusions 57 5 Firm relocation at country level: Italy, the Netherlands and the United Kingdom Introduction The business registration system Italy The Netherlands The United Kingdom Firm relocation databases Firm relocation in the three countries in s Italy The Netherlands The United Kingdom Comparison and conclusions 82 6 Regional policy measures and their impact on firm relocation: the cases of Italy, the Netherlands and the United Kingdom Introduction Italy Regional policy measures and firm relocation in s Regional policy measures and firm relocation in s A focus on the Area Contract The Netherlands Regional policy measures and firm relocation in s Regional policy measures and firm relocation in s A focus on the IPR premium The United Kingdom Regional policy measures and firm relocation in s Regional policy measures and firm relocation in s A focus on the Regional Selective Assistance Summary and concluding remarks Core-periphery relocation in Italy, the Netherlands and the United Kingdom. A firm level investigation Introduction 154 6

8 7.2 The relocation of Italian firms from the centre-north to the 155 Mezzogiorno and the role of the Area Contract Descriptive statistics Other elements on the relocation process Conclusions for the Italian case The relocation of Dutch firms from the Randstad to the Northern 169 provinces and the role of the IPR premium Descriptive statistics Other elements on the relocation process Conclusions for the Dutch case The relocation of British firms from the South East to the 177 periphery and the role of the RSA measure Descriptive statistics Other elements on the relocation process Conclusions for the British case Conclusions Cross-border delocalisation Introduction Firm internationalisation strategies Cross-border delocalisation: the case of Italy Cross-border delocalisation: the case of the Netherlands The impact of international delocalisation on the home country: 206 cross-border delocalisation versus core-periphery relocation 8.6 Conclusions Summary and conclusions Summary Introduction The theoretical approaches Firm relocation studies and regional policies Firm relocation in Italy, the Netherlands and the United 214 Kingdom Core-periphery relocation in Italy, the Netherlands and the 215 United Kingdom and the role of regional policies Cross-border delocalisation Conclusions Trends for regional policies Further research 220 7

9 Samenvatting 221 Bibliography 229 Appendices 248 Acknowledgement 277 FIGURES 1.1 Types of firm relocation The core are and the periphery in Italy The core are and the periphery in the Netherlands The core are and the periphery in the United Kingdom , 5.2 Net firm migration in Italy in 1999 and sectoral patterns Firm migration in the Netherlands, , 5.5 Interprovincial firm migration and Manufacturing firm migrations with more than 10 employees per 76 COROP region in Total volume of company relocations in the UK, , 5.9 Net firm migration in the United Kingdom and destination of 79 investments from the South East ( ) 5.10 Origin of investments towards the South-East ( ) Net job migration in Manufacturing Initiatives in the Mezzogiorno subsidised by Law ( ) 6.2 Geographical distribution of Contratti d area and Protocolli 101 aggiuntivi 6.3 Area coverage of studies on the volume and type of movement, Policy coverage in Policy coverage in Policy coverage in Policy coverage in Area coverage of studies on the volume and type of movement, The municipalities in the Northern Netherlands and their prospects 121 with regard to IPR 6.10 Geographical distribution of the Decentralised IPR projects in the Northern provinces 123 8

10 6.11 Geographical distribution of the Decentralised IPR projects by 123 average investment ( 000) 6.12 Geographical distribution of the project investments New plants Geographical distribution of the project investments Expansions Investment volume per job created Manufacturing movement to the peripheral area from the Southeast Countries in Central and Eastern Europe receiving Italian and 192 Dutch investments 8.2 The industrial districts under survey Transfer of production capacity within two years Takeover of R&D by low-wage countries 203 TABLES 2.1 Relocation approaches and determinants Traditional and contemporary regional policies: a comparison The Business Registration Systems Code system of balance of change Enterprises and self-employment on and off the IDBR (millions) The Mutation Balance and the CREDO databases Head office relocation in 1999 by sectors Inward and outward moves of branch plants and the concomitant 251 employment 5.7 Branch plants and related employment in the Mezzogiorno 252 belonging to firms from the Centre-North. Origin and destination of investments per region 5.8 Branch plants and related employment in the Mezzogiorno 253 belonging to firms from the Centre-North. Origin of investments per region by sector 5.9 Branch plants and related employment in the Mezzogiorno 254 belonging to firms from the Centre-North. Destination of investments per region by sector 5.10 Firm migration in the period Firm mobility in the Netherlands in Southeast out - and in - migration at the regional level, (number of firms moved) 5.13 Firms, jobs and average jobs per move in the Southeast, Business moves by sector,

11 5.15 Industrial mobility by sector (percentage) Regional policy measures in the EU Member States Number of firms with more than 20 employees and employment in , by ownership type 6.3 Number of new plants with over 1,000 employees according to 92 type of ownership in the Mezzogiorno 6.4 Law 488/ Investment projects subsidised by Law 488/92 in the period Industrial investment projects in the Mezzogiorno by Centre- Northern firms - Law 488/92 (from 1996 to the beginning of 2002) Geographical distribution of centre-northern manufacturing 255 projects that have been granted by Law 488 to invest in the Mezzogiorno regions of origin and destination 6.8 Sectoral distribution of centre-northern manufacturing projects that 256 have been granted by Law 488 to invest in the Mezzogiorno regions of destination (absolute value) 6.9 The measures of the Negotiated Plans Program Contracts approved between 1986 and 2001 by centrenorthern 99 and foreign firms 6.11 Area Contracts concerning de-industrialised areas where Stateowned 102 enterprises were located 6.12 Investment projects subsidised by the Area Contract and Protocolli 102 aggiuntivi (at ) 6.13 Origin of the AC-granted investments Decentralisation of manufacturing plants, with more than employees, from the west to the three other parts of the country in Government budget for spatial economic policy, The NOM Development Agency Approved investment projects in the northern provinces, Geographical distribution of investment projects subsidised by the 121 Centralised IPR ( ) 6.19 Investment projects subsidised by the Decentralised IPR ( and ) 6.20 Geographical distribution of the Decentralised IPR projects ( mln) Sectorial distribution of the Decentralised IPR projects (new plants 126 and enlargements) 6.22 Bureau Louter classification

12 6.23 Number of new full-time jobs involved in the projects by sector Investment origin of a selected sample of 195 cases Investment amount of a selected sample of 195 cases ( 000) by 127 origin 6.26 Measures of the Regional Industrial Assistance Total government funding for Regional Development Agencies ( 138 million) 6.28 Expenditure on regional preferential assistance to industry in Great 139 Britain, Appraisal criteria of the Regional Selective Assistance and the 140 Enterprise Grant 6.30 Approved projects in Number of projects and grant offered by project type RSA applications by location of ownership RSA offers by type of Assisted Areas in Grant awarded by region and county The components of regional policy in Italy, the Netherlands and the 147 United Kingdom 6.36 Regional incentive types in the three countries Firm relocation and regional policy in Italy, the Netherlands and 150 the United Kingdom ( s) 7.1 Geographical distribution of the AC-granted projects Origin of the investments Investment size (by Area Contract) Motivations to relocate (pull factors) What would have happened to the project if AC grant had not been 158 awarded 7.6 Obstacles to investment location Pull factors Component Score Coefficient Matrix Total variance explained (2 components) Total variance explained (3 components) Number of Cases in each Cluster Final Cluster Centres Geographical distribution of firms by clusters Leading participants in the relocation process to the Mezzogiorno

13 7.15 Expenditure for the per-capita development (average , 167 ) 7.16 Origin of IPR-granted firms that have invested in the northern 170 provinces 7.17 Motivations to relocate (pull factors) for IPR-granted firms What would have happened to the project if IPR grant had not been 171 awarded 7.19 Ten highest rated towns in the Northern Netherlands in 1997, by 173 location area of the respondents 7.20 Geographical distribution of RSA-granted projects Country of ownership The influence of RSA on investment decisions Nature of competitive advantage of the RSA project over other 181 suppliers 7.24 What would have happened to the project if RSA grant had not 182 been awarded 7.25 Characteristics of additionality of sample projects by project size 182 (% of grants) 7.26 Other locations that could have been chosen for the project Other locations that were considered for the project Internationalisation strategies Internationalisation strategies of Italian firms (%) Internationalisation strategies of the district SMEs (%) District SMEs that acquire and sell in subcontracting Activities that have been relocated to the SEECs (%) Motivations to delocalise (%) Countries of location Internationalisation strategies of Dutch firms Conclusions and accepted hypotheses