State Characteristics and the Locational Choice of Foreign Direct Investment: Evidence from Regional FDI in Mexico 1989–2006

ABSTRACT Despite the growing importance of foreign direct investment (FDI) in the Mexican economy, statistical evidence on the determinants of the regional distribution of foreign‐owned firms is seriously limited. In this paper, empirical findings are presented from a variety of econometric models that identify several regional characteristics influencing the locational choice of FDI. The main findings are threefold. First, several locational factors appear to be potentially important; these include regional demand, wages, schooling, infrastructure, and agglomeration economies. Second, the effect of agglomeration economies stems from several sources. In particular, the regional presence of agglomerations of manufacturing activity and of foreign‐owned manufacturing firms both have an independent positive effect on the locational decision of new FDI. Third, the locational process of maquiladora firms differs from the locational process of overall FDI. The actual findings suggest that regional demand and infrastructure, as suggested above, are not important locational factors for export‐oriented firms. Furthermore, whereas agglomeration economies from manufacturing and the presence of existing FDI attract new maquiladora investment, the presence of a regional agglomeration of services deters the location of new maquiladora firms. Finally, agglomeration economies appear to be more important in the locational process of maquiladora firms.     

Empirical Study on the Macroeconomic Performance of China''s FDI

The problem on performance of foreign direct investment is the heart of matters, which are further expanding foreign direct investment in China and strengthen international competitive ability of Chinese enterprises. The empirical study on macro performance shows that foreign direct investment in China has made no difference to economic growth and export promotion, both long term and shot term; for a long term, it has no remarkable effect on foreign exchange reserve, but remarkable and negative effect in a short term. It has no any effect on domestic investment in long or short term. There is no balance relation in long term and no cause and effect relation either between foreign direct investment and FDI inflow, or between foreign direct investment and total factor productivity. Foreign direct investment in China has no remarkable effect on macro performance.     

International Comparison of the Relationship between Outflow FDI and Economic Growth and Its Inspiration to China

International direct investment improved the world economic development greatly, and the level of capital transaction of a country indicates its degree of integration into world economy. In China, there exists a serious unbalance between outflow FDI (Foreign Direct Investment) and inflow FDI, and the former is of a extremely small scale. The relationship between outflow FDI and a country's economic development, as well as the relationship between outflow FDI and TFP (Total Factor Productivity) growth rate is analyzed with international comparison and econometrics model. The results show that a obvious positive correlation between outflow FDI and GNP exists, and outfolw FDI of a country improves its GNP growth a lot. Meanwhile, as to the contribution elasticity to TFP, outflwo FDI is much higher than international trade. It is revealed that China not only has necessities, but also has great potentialities to invest in foreign countries. Finally some suggestions are put forward.     

Local Sourcing and Technology Spillovers to Mexican Suppliers: How Important are FDI and Supplier Characteristics?

I present novel direct evidence on the static and dynamic impact of producer firms on local suppliers based on several firm level surveys that I conducted among producer firms and suppliers in Nuevo León, Mexico. I find that the level of use of suppliers does not differ between foreign direct investment (FDI) and Mexican producer firms. Next, I find substantial evidence that FDI firms generate a larger local dynamic impact; foreign‐owned firms apply more pressure on their suppliers to improve and are also significantly more involved in the provision of several types of technological and organisational support. In extension of these findings, I use multivariate analysis to identify characteristics of suppliers and supply linkages that influence the dynamic impact among suppliers. I find that the level of absorptive capacity of suppliers, the size of the technology gap between producer firms and suppliers, and the provision of support by producer firms all enhance the likelihood that suppliers experience a large positive dynamic impact. Importantly, even when I control for the effects of these factors, suppliers of FDI firms are still significantly more likely to experience a large positive impact.     

Ever-transient FDI and ever-polarizing regional development: Revisiting conventional theories of regional development in the context of China,Southeast and South Asia

In this new age of globalization, regions attempt to attract foreign direct investment (FDI) in order to achieve regionally balanced development. We revisit existing theories of regional development and FDI by analyzing recent data sets on FDI, employment, and trade in China, Southeast Asia, and South Asia. Using Chinese provincial data in 2004, 2008, and 2013 and applying panel estimations, our econometric results demonstrate that FDI remarkably influenced the concentration of employment in manufacturing, financial, and business services industries within the three Chinese macro-regions. We also find that FDI is ever transient, always moving away from high-cost to low-cost production bases across different regions. This transient nature of FDI is spatially selective and biased, and not able to generate the trickle-down effects to other neighboring regions. That is why FDI recently moved from China to Southeast and South Asia rather than from its coastal to inland regions. Furthermore, we show that this nature of FDI generally leads to polarization development for regions. As a synthesis or extension of the existing theories, we propose a leapfrog polarization pattern and strategy for vast developing countries in considering their regional development strategies.     

Agglomeration and Competition among Chinese Cities: An Investigation of Taiwanese High‐Tech Foreign Direct Investment

The purpose of this study was to investigate how Taiwanese high‐tech firms' foreign direct investment (FDI) leads to agglomeration and competition among cities in China. By using social network analysis to analyze 1,111 subsidiaries affiliated with 270 multinational corporations (MNCs) during the years between 1988 and 2006 in 30 major Chinese cities, this study finds that: 1) agglomeration in Chinese cities falls into three primary categories: the hub cluster, the communication‐extended cluster, and the computer‐extended cluster. Among the aforementioned clusters, the hub cluster is the most critical in terms of firm location, and therefore is often a high‐priority investment site for Taiwanese high‐tech firms. 2) Chinese cities fall into four primary groups, or “blocks”: the core block, the coast block, the inland block, and the periphery block; these groups were determined by applying a structural equivalence analysis of which members of each type are in competition with one another. By linking the findings of the urban network characteristics to Chinese regional economic policies, this study provides guidance to aid executives in determining the optimal location for future FDI. Implications and suggestions for host country governments in terms of firms' investment strategies are also discussed.     

The rise of Chinese foreign direct investment in the United States: Disentangling investment strategies of state-owned and private enterprises

Over the last two decades, China's outward foreign direct investment (OFDI) has expanded rapidly. The country is now the world's second-largest source of OFDI. China is often viewed as a monolithic investor, however, without sufficient attention to the differences between investments by state-owned enterprises (SOEs) and private enterprises (PEs). To shed light on the internal complexity and heterogeneity of Chinese OFDI, we construct a panel dataset of investments in the U.S. across the 50 states and Washington, D.C. from 2005 to 2017, which we analyze using a spatial autoregressive model. We find clear evidence that the ownership structure of Chinese firms affects investment strategy and entry mode. Statistical analysis indicates that SOEs are more likely to pursue greenfield investment motivated by market-seeking and resource-seeking objectives, while PEs pursue mergers and acquisitions in order to obtain strategic assets. We also detect a positive and significant relationship between the presence of Chinese overseas communities and OFDI, with the strength of the correlation depending on ownership structure. Finally, we find that Chinese OFDI is spatially dependent, meaning that investments flow to states where they are already concentrated nearby.     

The Spatial Dimension of Trade‐ and FDI‐driven Productivity Growth in Chinese Provinces: A Global Cointegration Approach

This paper analyses the major determinants of long‐ and short‐run labour productivity evolution for Chinese provinces between 1978 and 2010. The role played by openness to trade and foreign direct investment (FDI) constitutes the main focus of this analysis. From a methodological perspective, our main contribution is the inclusion of spatial effects into a dynamic error correction modelling framework. The results show that, in addition to domestic factors such as investment intensity and infrastructure use, trade openness and inward FDI also exert a direct impact on labour productivity. Furthermore, the geographical environment has a strong indirect influence on productivity: The more a region is surrounded by high‐productive regions with good infrastructure and linkages to the world economy, the higher are its productivity level and growth rate. The magnitude of these impacts varies by spatial regime (coastal, interior provinces) and time period in focus. Especially in the recent past, trade and FDI activity appear to be increasingly important drivers of regional productivity evolution, both for coastal and interior regions. These findings have important policy implications: In order to fully exploit the benefits from such spillovers, coordinated industrial policies which foster regional complementarities and support the free movement of production factors across regional borders are crucial.     

FDI in Space Revisited: The Role of Spillovers on Foreign Direct Investment within the European Union

We estimate a spatial econometric interaction model for bilateral aggregate FDI stock data between 25 European Union member countries in 2010. We find evidence for spatial spillovers of foreign direct investment for three different types of spatial dependence. Our results document FDI spillovers between neighboring countries of FDI origin countries, neighboring countries of FDI destination countries as well as between neighboring countries of both FDI origin and destination countries. Relying on recently developed methods, we provide the first model‐consistent interpretation of marginal effects of market size (measured by GDP) as well as GDP per capita on bilateral FDI activity. Our research highlights the importance of taking into account spatial lags when estimating bilateral FDI gravity models.     

Beyond as bridges: The role of the Chinese voluntary associations in Chinese outward foreign direct investment in Southeast Asia

With the implementation of the ‘Go Global’ strategy and the Belt and Road Initiative, Chinese enterprises have gradually grown into the main force of outward foreign direct investment (OFDI) around the world. Overseas and domestic Chinese voluntary associations (CVAs) have actively promoted inward foreign direct investment in China, while their role in helping Chinese enterprises invest abroad has not been fully revealed. To address this lacuna, we explore the role of CVAs in the foreign direct investment of Chinese enterprises in Southeast Asia and the heterogeneity of their roles based on different types of associations. Our main argument is that CVAs play an intermediary role in shaping Chinese OFDI by facilitating bilateral information exchange and resource matching to enable enterprises' global–local interactions. This research contributes to verifying the impact of CVAs on Chinese enterprises' OFDI and providing implications for both host countries to attract investment and multinational enterprises from China and other developing countries to achieve internationalisation.     

The Dynamic Model Describing Influence of Industrial Structure and Technology Transfer on Economy Growth

The dynamic model of describing influence of industrial structure and technology transfer on economy growth is given in this paper. The model reflects three important results as follows (i) If Small Open Economy (SOE) is multiple and the number of employers in service department is increasing,then GNP per capital will grow;(ii) The change of industrial structure in manufacturing department will lead higher GNP per capitcal;(iii) If foreign direct investment (FDI) is realized by multisnational company with accompanying transfer of its own technology and productive service,then economy growth of the state which is imported the technology will be slowed down.     

稀释中的深化效应：城镇化对农村人力资本积累的影响

城镇化与农村人力资本积累之间的关系将会影响到乡村振兴战略和城乡融合发展的成败。基于理论分析和2005—2017年中国省级面板数据,采用固定效应、面板工具变量估计方法检验城镇化对农村人力资本积累的因果效应和内在机制。结果表明：（1）在控制其他变量的条件下,城镇化对农村人力资本积累具有显著的正向影响,城镇化率每提高一个百分点,农村人均人力资本大约增加1200~1300元;（2）城镇化强化了农村家庭人口质量偏好,农村人力资本投资持续增加,即城镇化对农村人力资本的深化效应是借助人口质量偏好机制而现实的。上述发现进一步澄清了城镇化与农村人力资本积累之间的逻辑关系,并为政府部门在设计和完善相关政策方面提供理论启发和经验证据。     

适应新形势，进一步改进江苏农业科技工作

经过改革开放20多年的发展,江苏省农业科技工作的经济社会环境发生了变化,科技进步的主体发生了变化。针对新的情况和存在问题,主张政府增加投入,稳定现有基层农技队伍,改善市县农科所的工作条件;建立先进性和有用性两套评价体系,以鼓励科技人员解决江苏省农业生产中的实际技术问题;鼓励外资、民营资本等投资农业,鼓励专业大户、农民经济组织等的发展;政府收购和推广各种实用农业技术等。     

The impact of land finance on urban land use efficiency: A panel threshold model for Chinese provinces

The improvement of urban land use efficiency has become the main goal for developing countries in response to rapid urbanization. This paper explores the impact of land finance on urban land use efficiency (ULUE) on the provincial level using land conveyance fee and land‐related tax data from China between 2004 and 2016. First, a super‐efficiency data envelopment analysis model was applied to measure ULUE. The results showed that ULUE was highest in eastern China, followed by central China, and ULUE was lowest in western China. Then, a provincial panel threshold model was built for an empirical analysis. In particular, a double threshold was identified in the relationship between the land conveyance fee and ULUE. A significant positive effect on ULUE was found when the percentage of the new construction land supply quantity remained below 0.401. However, this effect became negative when the percentage of threshold variables exceeded 0.842. Moreover, land‐related tax was found to exert significant negative effects on ULUE when the percentage of the new construction land supply quantity remained below 0.842. Insignificant positive effects were found when the percentage exceeded this level. The empirical results suggested that the relationship between land finance and ULUE is nonlinear; excessive land finance will negatively impact ULUE.     

Foreign direct investment flows to Mexican states: A study of the automobile industry, 2004–2014

This study examines the subnational flow in foreign direct investment (FDI) to Mexican states, with a focus on the finished vehicle industry. Although prior studies have examined subnational FDI in Mexico, research on the automobile sector has been scant. Utilizing a framework associated with the theory of asset specificity, we examine the influence of human capital and labor conditions, infrastructure, subnational policies, and security. The study employs a data set on finished vehicle FDI across 31 states and the Federal district for the period of 2004–2014. We adopt a two‐part model. The first part, which includes all states and the Federal district, is estimated with pooled logistic and Firth logistic regressions. In the second part, we examine variation in levels of FDI among states selected for investment with pooled ordinary least squares with panel‐corrected and Driscoll Kraay standard errors. Labor conditions are significant for both state selection and levels of FDI, but education is influential only in the selection stage. In addition, states with trunk rail lines linked to the U.S. border are more likely to be selected and receive higher FDI. After controlling for these influences, murder and homicide rates, and state development have no significant effects.     

Local Embeddedness,Market Focus,and Productivity: Evidence of Taiwanese Manufacturing MNE Subsidiaries in China

There has been considerable literature discussing the characteristics and importance of location‐specific factors in the context of Foreign Direct Investment (FDI), but very little literature linking location‐specific factors to productivity. This study explores, for each location‐specific factor, the relationship between the degree of local embeddedness and the labor productivity. We contribute to the body of literature on location‐specific factors by arguing that market focuses play a pivotal role in determining the impact of local embeddedness on productivity. Based on their strategic choices, we categorize Taiwanese manufacturing multinational enterprise (MNE) subsidiaries in China into two groups: the local‐market‐focus group and the export‐market‐focus group. The paper fits the Ordinary Least Squares (OLS) regression models to the export‐market‐focus group and the local‐market‐focus group separately. For these two groups, each local‐embeddedness variable exerts different effect on labor productivity. Results also suggest that local‐market‐focus FDI is more affected by the host country's local business environment than is export‐market‐focus FDI. Although this study cannot represent all foreign companies in China, its dynamism offers a rich context in which to explore a deeper understanding of foreign companies' business activities in China.     

The Location Behavior of the Multinational Enterprise: Some Analytical Issues

ABSTRACT In the international business literature location behavior has traditionally been analyzed using Dunning's (1977 ) OLI framework, which focuses on the nature, role, and behavior of multinational enterprise (MNE). In this paper it is argued that this approach is now no longer appropriate for discussing the spatial behavior of MNEs, because of the fundamental changes which have taken place either in MNE organization or in the global and institutional environment for foreign direct investment (FDI). At the same time, the paper argues that current location theory from regional economics and economic geography is also largely unsuitable for discussing these issues, such that the spatial behavior of the MNE provides a set of difficult challenges to location analysts. There appears to have been some response to these issues from the international business and management literature, most notably the Porter literature on clusters. However, it is also argued here that this literature provides few, if any, real answers to the problems set by the geographical behavior of the MNE. It is concluded that a fusion of traditional economic geography approaches with a focus on the information and organizational aspects of the firm and the region under consideration may be a way forward for both theory and empirical analysis.     

On the drivers of UK direct investment in the Spanish regions: A spatial Durbin approach

This paper empirically examines the key factors driving UK direct investment in the Spanish regions over the period 2000–2016 and, consequently, tries to unveil its main motivation. Applying a spatial Durbin panel model to capture spatial linkages, the results point to the existence of complementarity between the FDI received by a region and that of the remaining ones. This outcome, along with a positive and statistically significant spillover effect of market potential, reveals that complex-vertical FDI motivation with agglomeration economies prevails among UK MNEs investing in Spain. Additionally, our findings unveil the role played by some other FDI drivers, such as wages and infrastructure. Furthermore, the paper is unique in decomposing the average direct and spillover effects by region and pairs of regions, so that remarkable differences can be identified. This breakdown has strong significance from a policy perspective since it can guide regional policy makers. In short, our findings point out to the fact that FDI policy should be jointly designed by those regions presenting strong bilateral spillover effects. Thus, greater cooperation among policy makers would be welcome.     

The peri‐urbanisation of Shanghai: Planning,growth pattern and sustainable development

Abstract: With the increase of global integration, the peri‐urban area (PUA) of megacities in Asia has become a favourite destination for foreign direct investment (FDI). This paper uses the PUA of Shanghai as a case study to investigate the impact of global forces on the urban expansion of the city, and the link between urban growth and sustainable development in this mega‐urban context. Shanghai has grown impressively during the past two decades in terms of economic and physical transformation. Much of this transformation has rested on the unbridled exploitation of land and other environmental resources in its peri‐urban area. This is characterised by the designation of development zones and the concentration of manufacturing FDI, resulting in dispersed growth and environmental degradation. The disruption of the physical environment, combined with the concentration of the urban poor in these areas (in particular ‘temporary migrants’), has turned the PUA into a potential crisis point threatening the social and economic development of the city.