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Papers by Paulo Guimarães

Journal of Urban Economics, 2000

In urban economics, and more recently in the international economics literature, agglomeration ha... more In urban economics, and more recently in the international economics literature, agglomeration has been offered as a principal determinant of new investment. Yet agglomeration has rarely been subject to precise statistical tests. In this paper, the availability of detailed urban and regional data for Portugal allowed for a close study of the spatial choices for newly created foreign-owned plants. It appears that agglomeration economies are decisive location factors. Service agglomeration has a notably strong effect, while industry-level localization economies and urbanization externalities are verifiable location determinants as well. Distance from the principal cities is statistically significant, but there is no evidence that local labor costs matter. ᮊ

Journal of Urban Economics, 2002

An investor's home bias in industrial location decisions may stem from personal factors, social c... more An investor's home bias in industrial location decisions may stem from personal factors, social capital, other non-transferable assets, and imperfect information about the urban and regional environment. This paper explores the distinction between home-base and non-home location decisions in Portugal. We reach two important conclusions. First, the introduction of a variable accounting for prior base of economic activity significantly improves the statistical results. Second, we find that the weighting of distinct location attributes differs between home and non-home locations. Notably, non-home location choices are strongly governed by agglomeration economies and proximity to major urban centers, possibly replicating prior location decisions to economize on search costs. The results also enable us to quantify the investor's willingness to opt for a possible homefield advantage; for example, entrepreneurs accept over three times higher labor costs to compete in their resident area of business.  2002 Elsevier Science (USA). All rights reserved.

Journal of Urban Economics, 2006

In this paper, we examine high-technology location in US counties, focusing on the relationship w... more In this paper, we examine high-technology location in US counties, focusing on the relationship with university research and development (R&D). The Dirichlet-Multinomial model (an extension of the conditional logit model that allows for overdispersion) is used to estimate the determinants of manufacturing establishment births in US counties. We test the hypothesis that university R&D generates spillovers captured locally as new high-technology establishments, after controlling for local costs, demand, agglomeration economies and other important location factors. Estimates show that R&D expenditures at universities exert a positive, statistically significant influence on the decision to locate plants in a county. The marginal impacts of increased R&D funding on county probabilities for new high-tech plant births, however, appear to be modest. Separate estimates indicate that the findings hold up across most individual high-tech industries. Our model also determines the distance from university R&D in which economic spillovers can be detected. Spillover effects may extend up to approximately 145 miles from universities.

Regional Science and Urban Economics, 2009

Journal of Regional Science, 2004

Given sound theoretical underpinnings, the random utility maximization-based conditional logit mo... more Given sound theoretical underpinnings, the random utility maximization-based conditional logit model (CLM) serves as the principal method for applied research on industrial location decisions. Studies that implement this methodology, however, confront several problems, notably the disadvantages of the underlying Independence of Irrelevant Alternatives (IIA) assumption. This paper shows that by taking advantage of an equivalent relation between the CLM and Poisson regression likelihood functions one can more effectively control for the potential IIA violation in complex choice scenarios where the decision maker confronts a large number of narrowly defined spatial alternatives. As demonstrated here our approach to the IIA problem is compliant with the random utility (profit) maximization framework.

Journal of Regional Science, 2007

ABSTRACT The index proposed by Ellison and Glaeser (1997) is now well established as the preferre... more ABSTRACT The index proposed by Ellison and Glaeser (1997) is now well established as the preferred method for measuring the localization of economic activity. In this paper we develop an alternative localization measure that is consistent with the theoretical framework originally proposed by Ellison and Glaeser. Our measure follows directly from the Random Utility (Profit) Maximization (RUM) location decision model. Because the distributional assumptions in our model are fully compatible with RUM, we are able to offer a more efficient measure of industry clustering.

Review of Economics and Statistics, 2003

The conditional logit model based on random utility maximization has provided an adequate framewo... more The conditional logit model based on random utility maximization has provided an adequate framework to model rm location decisions. However, in practice, the implementation of this methodology presents problems when one has to handle complex choice scenarios with a large number of spatial alternatives. We posit the Poisson regression as a tractable solution to these problems. We demonstrate that by taking advantage of an equivalence relation between the likelihood function of the conditional logit and the Poisson regression we can, under certain circumstances, easily estimate a conditional logit model regardless of the number of choices. This insight should be particularly useful for studies of economic location.

Applied Economics, 2004

The purpose of this paper is to analyse the entry process of foreign direct investment (FDI) in P... more The purpose of this paper is to analyse the entry process of foreign direct investment (FDI) in Portuguese industrial sectors. Portugal presents an interesting case where firms enter to take advantage of export opportunities. The results suggest that foreign firms possess the ability to overcome existing entry barriers that affect domestic firms. Apparently, foreign firms have different expectations about profitability than domestic firms, possibly due to foreign firms’ export-orientation to the rest of the European Union (EU). They appear to desire industries where other foreign firms have clustered. Above all, it appears that these foreign firms enter industries to exploit Portugal's chief location advantage in Western Europe: low wages. Portugal's FDI experience is relevant to other countries that have opened their economies to greater trade and investment and attracted export-oriented firms.