Determinants for locating research and development activity in Europe

In this paper, we contribute to the literature by analyzing the location determinants of R&D activities in Europe. We do so by studying the location choices of 1281 investment decisions from 2007 to 2012. We used a dataset from the European Observatory IFA. We began by analyzing the location determinants of R&D activities and then studied the co-location phenomena between production and innovation activities at the firm level. The results confirm that the location of innovation activities is more driven by market access, agglomeration forces and skilled labor pools. Furthermore, we demonstrate there is interdependence between the location decisions for innovation and production units at the firm level.