THE IMPACT OF TECHNOLOGY AND INNOVATION ON MULTINATIONAL CORPORATIONS’ LOCATION CHOICE FOR INVESTMENT

Abstract

This study examines the role of technology and innovation in shaping multinational corporations’ investment location choices, in the context of increasingly efficiency-seeking and value-added–oriented international capital flows. Using an unbalanced panel dataset of 35 Asia–Pacific countries over the period 2013–2023, the study develops two empirical models to separately test the effects of technology and innovation on foreign direct investment (FDI), which serves as a proxy for investment location outcomes. The models are estimated using pooled Ordinary Least Squares (OLS) and Generalized Least Squares (GLS) methods to address heteroskedasticity in panel data. The empirical results indicate that both technology and innovation exert positive and statistically significant effects on multinational corporations’ location choice decisions, even after controlling for conventional macroeconomic and institutional factors. These findings suggest that technology and innovation function not only as foundational conditions but also as critical location-specific advantages in attracting international investment projects in the long run.