Place, space, and foreign direct investment into peripheral cities

Abstract

Perspectives drawn from the economic geography literature are increasingly used to generate insights into locational issues in international business. In this paper, we seek to integrate these literatures further by investigating the locational determinants of foreign direct investment (FDI) into peripheral cities within an emerging economy. Peripheral cities in emerging economies are attracting a growing proportion of global FDI flows, but the international business literature lacks a framework for understanding subnational determinants of FDI, particularly into non-core locations. We draw on the core-periphery model to build and test theory on how spatial interdependencies between subnational locations impact on the distribution of FDI inflows into a large and heterogeneous country China. Our results show that whilst peripheral cities tend to have a negative effect on FDI, this effect is positively moderated by proximity to core cities. The results highlight the importance of considering interactions between place and space when investigating locational issues in international business.

The Influence of Foreign Direct Investment and Public Incentives on the Socio-Economic Development of Regions: An Empirical Study from the Czech Republic

“…Foreign direct investments tended to involve a search for lower production costs in regions rather than technological and research potential. These conclusions also follow the research from McDonald et al (2018), who found that positive effects of FDI increase with greater geographic proximity to core cities. With the growth of innovation performance of the regions, there also comes the strengthening of the link between foreign direct investment as well as the development of science and research activities in addition to their internationalization (Miravitlles et al, 2013).…”

Developing international social capital: The role of communities of practice and clustering

“…Space refers to physical distance and area (where a particular process is happening) (Anderson, 2012). Place aims to capture the specificity or uniqueness of particular places (embedded in environmental, social, cultural, institutional and political context) (McDonald et al, 2018).…”

Economic Activity in Peripheral Regions – a Case of Poland

“…The possible participation of peripheral regions in complex processes of sustainability transitions on the example of a selected peripheral mountain region of Austria was studied by Kratzer (2018). McDonald, Buckley, voss, Cross and Chen (2018), as well as villaverde and Maza (2015) carried out research focusing on locational determinants of inflow of capital in the form of foreign direct investment into peripheral regions of emerging economies and pointed out to the significance of considering interactions between place and space. Hitchens (1999) studied and evaluated the possible implications of environmental regulations for competitiveness of EU peripheral regions.…”