Regional hierarchies and the location of hi tech MNEs: The case of the pharmaceutical industry in the UK

Abstract

In the “new age of capitalism”, regions are emerging as important catalysts for innovation and production development. This paper investigates the location patterns of R&D-intensive MNEs at the geographical micro-level. Analysis refers to the pharmaceutical industry and their foreign activities established in British regions. We develop a hierarchy of UK regions both on
a technological and skills basis but also on a broader basis covering the overall macroeconomic environment. Results point towards a combination of corporate location strategies. This pattern is consistent with MNEs’ commitment to access and tap into the specific technological assets embedded in the local knowledge systems and at the same time exploit their corporate-specific
advantages in large markets.

JEL Classifications: F23, L65, R30