Localization of Business Services in European Regions: Large Urban Areas Stand Out

Abstract

The recent increase in business services in terms of both value added and employment has had a positive effect on regional economies, helping them to create a comparative advantage and contributing to the general development of regional productive systems. This heterogeneous set of activities is characterized, among others, by its uneven distribution in the territory. In this paper we aim to identify the key factors that influence the location of business services within the NUTS 2 regions of the European Union. Using a multivariate analytical approach (combining a principal components factor analysis and a multiple linear regression by means of ordinary least squares), four key factors have been identified. In terms of their influence on the location of business services, we can pinpoint the following factors: urban dimension, competitiveness, accessibility and economic dynamism. It was found that business services tend to locate in urban, densely populated and dynamic areas with high levels of competitiveness and easy access.