Casual evidence suggests that multinational companies increasingly look for places with adequate transport and
logistic infrastructure to locate affiliates that participate in cross-border production sharing. Yet, there are no
systematic empirical analyses examining how logistic infrastructure interacts with the location decisions made
by multinationals.Most studies on the determinants of FDI address the issue of transportation-logistics by examining
the impact of distance on the relevant outcome, but distance does not capture by itself the quality of the logistic
systems in place.We overcome this shortcoming in the literature by embedding indicators of infrastructure into an
empirical framework that examines whether countries with adequate logistic systems attract more vertical FDI and
particularly in industries that are more dependent on logistic services. We find that logistic infrastructure positively
impacts vertical FDI in addition to the impact typically found on distance. A change from the first quartile to the
third quartile of the distribution of logistic infrastructure is associated with an average increase in the number of
vertically-integrated subsidiaries equivalent to 29%.