Locational Tournaments in the Context of the EU Competitive Environment : A New Institutional Economics Approach to Foreign Direct Investment Policy Competition between Governments in Europe

The last decade has witnessed a dramatic change in attitude towards foreign direct investment (FDI) and a significant increase in competition between governments to attract FDI as a result. These "locational tournaments" are perpetuated not simply by classical factor endowments, but also by government interventions that impact both market imperfections and FDI flows.