In this paper, we investigate the extent to which the entry of new foreign firms into a host economy is influenced by location-related factors associated with the economy's business environment, specially its agglomeration economies and labor market composition. To analyze this dynamic as it occurs in Spain, we create an original database of information from 2005 to 2012 that represents 6 home-country groups, 50 provinces and 22 sectors. Our results indicate that localization economies can partly explain the entry of new foreign firms, whereas human capital plays no role in that dynamic, which suggests that foreign investors are not principally attracted by high-skilled employees, since foreign vacancies are generally filled by medium-skilled workers. In sum, our findings emphasize Spain's particular problems with incentivizing long-term foreign direct investment in its local economies.