Abstract

This paper reviews the determinants of location choice of multinational firms and discusses policy instruments to improve the foreign investment attractiveness of Italian regions. Empirical literature suggests that Italian regions attract significantly less than their potential due to the inefficiency of the bureaucratic apparatus and of the legal system. Low values of human capital, infrastructures and other regional characteristics also influence the performance of Southern regions. Two policy instruments have been used to boost the competitiveness of Southern regions: the "Planning Contracts" and the "Location Contracts", but both of them have shown a limited efficiency. Some recently created Regional Development Agencies have proved to be successful, but the lack of a national coordination still limits their effectiveness.