The Location of Industries: The Effect of Chance or Rational Choice?

Abstract

The choice of location plays a major role in the strategies of firms. They are looking for qualified labor, a potential market, but also infrastructure, good accessibility, etc.: an “optimal” location. Indeed, the location is influenced by a greater or lesser number of factors whose weight and diversity vary greatly from one situation to another and the same factor can exert different influences. So, a single factor cannot explain the location of a firm.

This study analyzes the location factors of industrial companies in the commune of Littoral. The data used come from the base of the RGE 2, 2008, and the base of the Statistical and Fiscal Declarations (DSF) available to the INSAE and covers the period from 2012 to 2016. After a descriptive analysis of the companies according to the distance to the center of Cotonou, we have developed a probit model under the STATA software using the factors identified in theoretical and empirical work.

It emerges from the descriptive analysis that distance influences the location of industrial enterprises. The tests revealed that the distance, the market across, the sale of the manufactured products and services positively influence the location decision of the companies. So, companies locate in Cotonou to benefit more from the market.