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.     

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.     

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.     

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.     

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.     

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.     

Manufacturing Decline and Technology Lags in Nonmetropolitan Illinois

Numerous studies have focused on national and regional manufacturing decline in the U.S., but far less attention has been placed on decline in substate areas. This oversight is troublesome because manufacturing decline in substate areas, particularly in the Midwest, has been severe and prolonged. This paper, therefore, examines the causes of manufacturing decline at the substate level. Specifically, I evaluate whether the impact of factors influencing decline varies according to the size and location of medium- and small-sized cities in Illinois. Survey data and loglinear modeling methods are used for the empirical analysis. The results indicate that the impact of technology lags in substate areas varies significantly by the size of cities. The effects of technology, the regional shift of manufacturing, and federal trade policies are influenced by the relative location of cities.     

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.     

Prediction of Yield for Specific Locations in German Winter-wheat Trials

The interaction between varieties and environment can make the prediction of crop performance difficult. The farmer is obviously interested in achieving optimum production within the particular growing environment of his farm, thus, this paper investigates if crop performance predictions can be improved by making information from other locations into account. The investigation is based on yield data from winter wheat resulting from official German variety-performance tests. The predictors are based on the single location (control), unweighted means, principal components, and weighted means, produced using regression coefficients as weights. These predictors were tested on an independent data set from another year. For the given yield data in winter wheat, the overall mean proved to be the best, which suggests that prediction for all locations should be the same, and predictors for specific locations cannot, therefore, be recommended. The main reason for this is the relatively small interaction between genotype and location, in comparison to the second-order interaction between genotypes, locations and years.     

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.     

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.     

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.     

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.     

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.     

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.     

Analysis on an Assessing Index System of Chongqing''s Green Investment Environment

Based on an integrative research on the investing environment of the 40 districts in Chonqing, this paper applies Factor and Cluster Analysis Method to analyze Chongqing's investment environment in a quantitative way. Besides an illustration of the characteristics of Chongqing's Green Investment Environment, the main purpose of this paper is to provide evidence to improve Chongqing's investment environment and reference to theoretical study of investment environment.     

The relationship between foreign direct investment and domestic entrepreneurship: The impact and scale of investments in China

Both entrepreneurship and foreign direct investment (FDI) are frequently identified as being sources of local and regional economic growth. However, the relationship between the two is not always clear, with a negative competition effect and a positive demand effect potentially present. China provides an interesting case to study with its large state-owned sector, combined with a recent history of successfully attracting considerable FDI. This study examines the relationship between self-employment and different elements of foreign influence (FI) at a provincial level. The results imply that foreign investment reduces the level of self-employment, whilst the number of foreign enterprises and foreign exports have positive effects. The results therefore show the importance in considering multiple perspectives in terms of FI. It appears that policies that attract individual large investments suppress the development of domestic enterprise as predicted by the competition effect, but where more foreign enterprises are present, and a cluster starts to develop, a demand effect appears to take over. This means that provincial government policy may need to be more nuanced to avoid economies being highly reliant on a limited number of what might be quite footloose larger foreign employers.     

中国农业生产用能区域差异的时空分析

为了从时空结合角度全面反映中国农业生产用能的空间演化特征及其形成机理,笔者根据各省单位耕地面积农业生产能源消费,利用全局空间自相关指数、局部空间自相关指数,分析了中国农业生产能源消费的空间分布格局,建立了空间回归模型以分析其影响因素。研究结果表明,中国农业生产能源消费水平在不断提高,但省际之间的绝对差异和相对差异在不断扩大;农业生产用能水平存在空间正相关,体现为能源消费高值区集聚和低值区的集聚;冷点区主要集中在中西部的广大地区,热点区主要集中在东南沿海尤其是长三角地区,温点区则集中在东中西的交界地带;农业从业人数、农业机械总动力、农业总产值和农业固定资产投资,是引起农业生产能源消费空间分异的主要原因,但各因素的影响程度不同。此外,空间自相关性也是影响农业生产用能空间分异的重要因子。     

天然橡胶国际投资发展潜力评估——以科特迪瓦为例

[目的］为给中国天然橡胶产业“走出去”提供科学参考,[方法］拟以国际投资理论和产业发展理论为支撑,构建橡胶种植业国际投资发展潜力评价体系,对科特迪瓦天然橡胶产业发展潜力进行评估。运用因子分析法得出影响天然橡胶跨国发展的关键因素,并进行综合评价。[结果］结果表明,较好的天然橡胶产业发展基础,较高的资源潜能开发度,广阔的经济发展前景对橡胶种植业国际投资有积极的推动作用。[结论］从评价的得分来看,虽然科特迪瓦天然橡胶产业发展环境存在不稳定性,但总体呈现向上的发展态势,中国天然橡胶产业在非洲的投资可以优先选择科特迪瓦作为主要投资目的地。     

福建省林业投资环境评价

林业投资环境评价研究成果能够为林业投资者决策提供参考资料,为政府改善林业投资环境提供决策依据。采用因子分析法得到影响林业投资环境的5个主要因子,并选取了广东、浙江、江西、湖南、湖北5个省份作为福建省林业投资环境的横向比较对象,通过评价得出：福建省林业投资环境5个因子的得分在6个比较省份中的排名分别为第一、第五、第二、第一和第四,综合评价在6个省份中居首位。在此基础上,找出影响福建省林业投资环境的薄弱因子,并且针对这些薄弱因子提出了改善福建省林业投资环境的建议。