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Graph of the week: How do leading R&D companies decide where to invest?

The location decision of top R&D-intensive MNCs is significantly and negatively affected by the level of product and labour market regulations, of profit taxes and costs of starting a business.

Product market regulation and employment protection policies show strong combined effects on decisions regarding top R&D investment locations: the higher the level of product market regulation, the higher the negative effect of employment protection legislation, and viceversa. This suggests that reforms in these two policy areas should be strongly coordinated in order to be more efficient and to allow Europe to succeed in the global regulatory contest.

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