The choice of location for the production plants of multinational firms is an important issue, not least because this decision is accompanied by so many fears brought into public debate. This book analyses how foreign direct investors choose their locations, whilst exploring the forces which shape international economic geography. Although these two issues are, to some extent, inter-related, researchers have only recently acknowledged the similarity of economic geography and international business approaches to the empirical assessment of likely causes of the degree of spatial concentration observed in many modern industries. Giving insight into the direction that future research should take, this book contains state-of-the-art papers on both theoretical and empirical levels. This original collection makes a particularly important contribution to our understanding of the existence and impact of home market effects. Introducing a welcome synthesis between two related and yet rarely integrated areas of study using case studies of firms in Europe, US MNEs and the Mexican automobile industry, this book will be welcomed by both academic and practising economists. Regional scientists and economists, and those with a specific interest in international trade issues will also find the book enlightening.

The development of clusters of economic activity is an important feature of industrial policy. Industry clusters have long fascinated economists and geographers alike, the most renowned being Silicon Valley which is seen by many as the blueprint for regional development, innovation, and growth. Several clusters have also developed across Europe, including SiliconFen in Cambridge and Minalogic in Grenoble, and in recent years cluster policies have become popular among policy makers as a useful tool for informing decisions on industrial, regional, and public policy. This book looks at the mechanisms at work behind cluster dynamics, the gains that can be expected from increased clustering, and the determinants of cluster policies. Focusing on France, it provides a theoretical and empirical study of clusters, their success and failures, and the policy lessons that can be applied to the wider international community. France is particularly interesting because there is a long tradition of strong government intervention regarding the location of economic activity, and cluster initiatives are relatively unified across the country. This book shows that, whilst gains from clusters do exist, some firms tend to cluster too much and that spatial agglomeration is only successful to a point, after which congestion effects can offset these gains. It questions the need and the feasibility of cluster policies aimed at interfering directly in the concentration process of firms, and thus looks beyond the general enthusiasm for clusters.

"Combes, Mayer, and Thisse have just given me an indispensable teaching tool and a great text for my students. Their book offers the most up-to-date, balanced, comprehensive treatment of both theoretical and empirical research."--Kiminori Matsuyama, Northwestern University

"In the field of geographical economics, this is exactly the kind of book that I have been waiting for. After presenting lucid and comprehensive coverage of the current state of theory, it provides the modern methodology for measuring spatial concentration and inequalities. Then it confronts the challenging task of comparing theory with facts. This book will serve as an ideal textbook for graduate students and scholars in economic geography, regional development, international trade, and public policy."--Masahisa Fujita, RIETI, Japan

"Economic geography has undergone something of a revolution in the last fifteen years with the application of formal theoretical modeling and econometric estimation to old questions. The many advances have, however, left us with a literature that is discursive, disparate, and disjointed. This book does an exceptional job of adding the needed structure, and helps all of us move toward a more complete and integrated understanding of this still-evolving area."--James R. Markusen, University of Colorado at Boulder

"Combes, Mayer, and Thisse have put together a marvelous book on economic geography. With clear, lucid writing, they present the theory and empirics of economic geography in a way that will provide insights to both those new to the field and those in search of an excellent reference work."--David Weinstein, Columbia University

"Combes, Mayer, and Thisse have produced therare text that is of value to both theorists and empirical researchers. They present the current state of knowledge about economic geography in an accessible way, paying equal attention to formal models and applied work. Their framework provides an elegant synthesis of concepts in regional economics, international trade, and economic development, which will be of broad interest to scholars and policymakers alike."--Gordon Hanson, University of California, San Diego

"A welcome addition to the literature. The authors are well-known researchers in the subject both on the theoretical and empirical sides. They put heavy emphasis on recent empirical research, not only reviewing the literature but also teaching the methodologies commonly used. No existing textbook in economic geography does this. This book fills a real gap."--Philippe Martin, coauthor of "Economic Geography and Public Policy"

"This book is well-written, extremely clear, and very well-focused. Other books are either too advanced for anyone starting in the field or too basic to be of any use beyond basic undergraduate courses. Beyond teaching, this book should also be very useful as a reference."--Gilles Duranton, University of Toronto