What are the determinants of the location of foreign direct investment? The Chinese experience

Cheng, Leonard K.; Kwan, Yum K.

doi:10.1016/s0022-1996(99)00032-x

Cited by 846 publications

(569 citation statements)

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“…Other studies focus on di¤erent economic outcomes. For example, Cheng and Kwan (2000) show that provinces hosting SEZ attract signi…cantly more FDI than do other provinces. Head and Ries (1996) analyze the location decision of international …rms in Chinese cities and …nd that SEZ have a positive e¤ect that is ampli…ed by agglomeration economies.…”

Section: Related Literaturementioning

confidence: 99%

Economic Reforms and Industrial Policy in a Panel of Chinese Cities

2013

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We study the effect of place-based industrial policy on economic development, focusing on the establishment of Special Economic Zones (SEZ) in China. We use data from a panel of Chinese (prefecture-level) cities from 1988 to 2010. Our difference-in-difference estimation exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20 %. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. The main channel is a positive effect on physical capital accumulation, although SEZ also have a positive effect on total factor productivity and human capital investments. We also investigate whether there are spillover effects of SEZ on neighboring regions or cities further away. We find positive and often significant spillover effects. AbstractWe study the e¤ect of place-based industrial policy on economic development, focusing on the establishment of Special Economic Zones (SEZ) in China. We use data from a panel of Chinese (prefecture-level) cities from 1988 to 2010. Our di¤erence-in-di¤erence estimation exploits the variation in the establishment of SEZ across time and space. We …nd that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20%. This …nding is con…rmed with alternative speci…cations and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. The main channel is a positive e¤ect on physical capital accumulation, although SEZ also have a positive e¤ect on total factor productivity and human capital investments. We also investigate whether there are spillover e¤ects of SEZ on neighboring regions or cities further away. We …nd positive and often signi…cant spillover e¤ects.JEL Codes. H72, L52, O25, O38, O53, P21, R11.

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Section: Related Literaturementioning

confidence: 99%

Economic Reforms and Industrial Policy in a Panel of Chinese Cities

2013

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“…Though the question of causality is a difficult one, using manufacturing FDI as an explanatory variable for service FDI, might provide evidence on the progression of the agglomeration process identified by studies showing that aggregate FDI is positively related to lagged FDI (Singh and Jun (1995), Lipsey (1999), Cheng and Kwan (2000), Noorbakhsh et al (2001) and Urata and Kawai (2001)). …”

Section: Data and Variables Includedmentioning

confidence: 99%

Determinants of foreign direct investment in services

Kolstad

Villanger

2008

European Journal of Political Economy

152

105

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“…Second, Sargan p-values confirm the validity of the instrument set. See, for instance, Blundell & Bond (1998), Cheng & Kwan (2000), Levine, Loayza, & Beck (2000) for further details. The specification tests we employ for the regressions suggest that we can safely confirm the absence of simultaneity bias, causality and endogeneity considerations in the GMM context (Hansen, 1982;Newey & West, 1987).…”

Section: [Insert Table 4 Here]mentioning

confidence: 99%