LOCATION ATTRIBUTES OF EMERGING ECONOMIES: AN ANALYSIS USING PRINCIPAL COMPONENTS

Our paper investigates the location attributes of a large sample of emerging economies from the perspective of foreign direct investments and multinational companies presence abroad. We use several macroeconomic variables that take into account the relevant location attributes for the decision of multinational companies to invest abroad and include them in a Principal Components Analysis to reveal the most relevant locational attributes or combination of such attributes that influence the decision of multinational companies to invest abroad. We find that only four variables had the most important contributions to the principal components: GDP per capita, international reserves, mobile phones subscriptions and labour force. Labour force is the variable that contributes the most to the first factor and its contribution grows in importance as we depart from 1994. At the same time GDP per capita has become less important in recent years.