Judicial efficiency and the location of foreign direct investment. Evidence from Italy

In this paper, we explore econometrically the impact of judicial efficiency on the attractiveness to FDI of Italian municipalities. The distinctive contribution of this paper is manifold. First, we consider the efficiency of different types of judicial proceedings (i.e. enforcement of civil contracts and labour contracts) across local courts and of different judgment levels (i.e. first and second instance courts). Secondly, we consider an ideal case: Italy is a centralized country, where the same laws apply in all the national territory, but the degree of law enforcement varies considerably across different courts. Lastly, our results have interesting policy implications, since they may help in highlighting the importance of non-targeted FDI policies as factors driving the location choice of MNEs.