type="main" xml:lang="en" <p>This paper incorporates heterogeneous demand elasticities and the quality/skill complementarity of production in a footloose capital model in order to explain the spatial selection of firms with differentiated quality. We find that when trade becomes freer, high-quality...</p>

The extent to which foreign direct investment (FDI) can foster the long-term economic development of lagging regions remains a highly debated issue in the literature, even in the current era of intense territorial competition for mobile investment and resources. The emergence of new industrial...