Local of Firms

Market Potential, Agglomeration Effects and the Location of French Firms in Africa

This paper informs the debate on the existence of agglomeration effects in Africa. It uses a structural estimation approach to investigate the impact of agglomeration economies and forward linkages on the localization of French affiliates in Africa. Using a sample of French subsidiaries in Africa, we compate the theoretically derived measure of market potential with the standard form used by geographers and with a measure of local demand. Our results show that maket potential matters for location choice.

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