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The relationship between inward investments and local firms' productivity is contingent on several contextual conditions that collectively define the ability of firms and regions to recognise, assimilate and commercially apply external knowledge. Yet the empirical literature has been unable to account efficiently for such multidimensional sources of heterogeneous externalities. We introduce a novel two-stage empirical methodology that allows accounting for a wide range of moderating circumstances. Relying on a sample of 11,000 UK firms over the period 2012–2018, we show that while the nature of places affects the potential externalities from multinational enterprises (MNEs), what matters more are firm-level characteristics. This has important implications for regional policy, particularly in understanding the drivers of inequality, both within and across regions. [ABSTRACT FROM AUTHOR]

We investigate the migration‐inward foreign direct investment (FDI) nexus in narrow geographies. A novel two‐stage empirical strategy allows us to investigate the role of migration as a determinant of multinational enterprises (MNEs) location choices and unpick heterogeneity in foreign investors' preferences towards the presence of migrants in the host location. This allows us to shed light on the relative importance of the underlying mechanisms linking migration and inward FDI. Relying on 1113 greenfield investments by 895 MNEs in Italian NUTS3 regions over 2003–2015, we find that immigrants from the country of origin of the investor exert a positive but highly heterogeneous effect on MNE location choices. Investors are more sensitive to the presence of migrants from their country of origin when they lack experience in the destination country (first‐time investors) and when their investments concern market‐access or business‐services (downstream) activities. This is consistent with the view that migrants act as information brokers that bridge the fixed costs of international business activities. [ABSTRACT FROM AUTHOR]