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Methodology

Methodology

The selection of a facility location for operations is an important strategic decision for manufacturing companies and SMEs. As globalization transcends national borders, the whole world becomes the potential realm for site selection decisions. This significantly changes the nature of facility location assessments, and the factors impacting the selection decision are paramount.

There is no consensus among academia or industry on the important factors. Some recent studies  considering the global dimensions of manufacturing site selection have cited a variety of economic, social, and political factors impacting manufacturing operations. The complexity of the facility location decision, combined with emerging global factors impacting site selection for manufacturing operations, poses serious challenges for the selection of critical attributes and the development of a methodology for data analysis for manufacturing facility selection. In this context, each of the eleven factors of location chosen by INVEST in LAC and the variables included for each of these factors is an exercise based on a combination of the experience and common sense of the IDB team, working papers (Determinants of foreign investment, Bruce Blonigen and Jeremy Piger. National Bureau of Economic Research, January 2011), theses and dissertations (Facility location selection for global manufacturing, Amir Hossein Kalantari. University of Wisconsin-Milwaukee, August 2013.), surveys of companies, and opinions of experts and investment promotion agencies worldwide.

The eleven factors of location are: 1) macroeconomic factors, 2) taxes and regulation, 3) political factors, 4) demography, 5) labor market, 6) human capital, 7) infrastructure, 8) water, energy and natural resources, 9) quality of environment, life and health, 10) foreign investment and 11) trade and logistics.

 

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