Spatial Disparities in Human Development: Perspectives from Asia - Edited by Ravi Kanbur, Anthony J. Venables, and Guanghua Wan

Planning & DevelopmentSSCI0BOOK REVIEW2382-3853

Foreign Manufacturing Investment in China: The Role of Industrial Agglomeration and Industrial Linkages

This paper investigates the forces that determine the industrial distribution of foreign manufacturing investment. It highlights the importance of industrial agglomeration and industrial linkage in attracting foreign investment to manufacturing industries. Using panel data for two-digit manufacturing industries in Beijing during the period of 1999-2004, this study finds that geographically agglomerated industries with strong intra-industrial linkages are indeed attractive to foreign investment. Previous foreign investment has led to the current industrial concentration of foreign investment. Investors also favor capital-intensive and technology-intensive industries, and they tend to be attracted to the most profitable and exporting industries, but avoid industries with high real labor costs and high entry barriers. Competitive local industries that possess comparative advantages are critical for attracting foreign investment. The existence of industrial clusters certainly enhances a city's attractiveness to foreign investment. Copyright (c) 2008 The Author. Journal compilation (c) 2008 Institute of World Economics and Politics, Chinese Academy of Social Sciences.

Location of foreign manufacturers in China: Agglomeration economies and country of origin effects

Using data from China, this article finds that agglomeration economies derived from the clustering of manufacturing and foreign investment activities, combined with better access to markets, influence the location of foreign manufacturers. Foreign enterprises are attracted to cities with investment incentives, but they avoid high labour cost locations. The locational patterns also suggest country of origin effects. American, Hong Kong and Taiwanese manufacturers tend to value access to domestic markets, while Japanese investors favour port cities. Further analysis indicates the presence of origin of country effects at the sectoral level. Copyright Springer-Verlag Berlin/Heidelberg 2003Agglomeration economies, country of origin effects, China,

Regional Decentralisation and Location of Foreign Direct Investment in China

China's economic transition is essentially a two-pronged decentralisation process: power and fiscal decentralisation from central to local government and shift of decision making from governments to firms and households. Using FDI flow data at the provincial level from 1995 to 2002, this study finds that provinces with more authority in economic matters and hardening fiscal budget constraints have a larger FDI inflow. Market decentralisation may significantly improve the investment environment and attract foreign investment while government interference in economic activities could discourage foreign investment. In addition, more legal spending in a province is associated with a smaller FDI inflow while subsidies to loss-making SOEs could bring more foreign investment.

Information costs, agglomeration economies and the location of foreign direct investment in China1

He C. (2002) Information costs, agglomeration economies and the location of foreign direct investment in China, Reg. Studies 36, 1029-1036. Foreign investors suffer from adverse information asymmetry and face internal and external uncertainties in host economies. Better access to information and a variety of agglomeration economies could attenuate the disadvantages that foreign investors encounter. Statistical results strongly buttress the argument that foreign investors are inclined to favour such locations that could minimize information costs and offer a variety of agglomeration economies. Theoretical and policy implications and further research directions are discussed at the end.Information costs, Agglomeration economies, Foreign direct investment, China,

Global, regional and local: new firm formation and spatial restructuring in China’s apparel industry

The rise of China as the 'world factory' has been attributed to the export-oriented industrialization largely driven by some fundamental transformations unfolding in China's economic, political and cultural arenas, since the Reform and Opening-Up policies. As production costs and competitive pressures both rise, the flexible business environment that export-led production used to embed in has undergone dramatic restructuring and this has further pushed forward new rounds of spatial restructuring and industrial relocation, especially in China's highly export-oriented apparel industry. Using a large firm-level dataset on new firm formation, we show the articulation of global, regional and local factors are shaping the new firm formation pattern and industrial relocation in interactional and collective ways. The econometric estimations also indicate the ways in which and the extents to which these factors affect firm location choice are highly determined by firm-specific capability. ? 2013 Springer Science+Business Media Dordrecht.EI02237-2537

Geographical agglomeration and co-agglomeration of foreign and domestic enterprises: a case study of Chinese manufacturing industries

Industrial agglomeration has been pervasive owing to natural advantages, spillover effects and institutional advantages. The co-agglomeration of foreign and domestic enterprises may be a driving force of intra-industrial agglomeration. Theories however provide conflicting predictions on whether foreign and domestic enterprises share similar locations. Based on data from the Annual Survey of Industrial Firms in 2005 in China, this study finds that foreign enterprises are considerably more agglomerated than domestic enterprises, and there exist significant industrial variations in the intra-industry co-agglomeration of foreign and domestic enterprises. Statistical analysis suggests that foreign-specific agglomeration and dependence on intermediate inputs from primary industries discourage the co-agglomeration of foreign and domestic enterprises. Differences in equipment, technology and labour productivity result in locational patterns of foreign enterprises distinct from those of domestic enterprises. Meanwhile statistical results confirm the positive role of external economies and knowledge spillover effects in driving the co-agglomeration of foreign and domestic enterprises.

Geography of Multinational Corporations and Functional Specialization in Chinese Cities

There has been a transformation of urban structure from mainly sectoral to functional specialization. This transformation is inextricably interrelated with changes in firms’ organization. Some cities host upstream functions of the value chain while others attract production and assembly. This paper investigates the tendency toward functional specialization in Chinese cities by exploring divisions in multinational corporations’ (MNC) business operations in China. Based on data from Fortune Global 500 MNCs during 1979-2008, the study finds that MNCs have gradually expanded in China, both functionally and geographically. In that process, similar functions tend to agglomerate in certain cities while complementary functions co-agglomerate in others. The analysis indicates that Chinese cities may start to move toward functional specialization, with upstream functions clustering in the top tier cities of the political and economic urban hierarchy