The determinants of location choice of South Korean FDI in China

Research output: Contribution to journalArticle

41 Citations (Scopus)

Abstract

By using extensive and unique firm-level data for South Korean foreign affiliates in China, we investigated the determinants of location choice for South Korean multinational companies. South Korean companies are unevenly distributed inside China with more than 60 percent of their affiliates being located in the three northeast regions. Using conditional logit estimation, we found that market size and government policies approximated by economic zones, quality of labor, and transport infrastructure play a positive role in deciding location. On the other hand, labor costs, inner waterways, and distance show negative and significant coefficients. Finally, the model specification is shown to be robust to possible violation of the assumption of identical independent error terms. Some of the estimation results stand in contrast to those of other studies on the determinants of FDI stock flows from the world or Japan.

Original languageEnglish
Pages (from-to)441-460
Number of pages20
JournalJapan and the World Economy
Volume19
Issue number4
DOIs
Publication statusPublished - 2007 Dec 1

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choice of location
determinants
China
labor costs
shipping lane
government policy
Japan
infrastructure
labor
firm
market
economics
Location choice
Labor
Market size
Coefficients
Conditional logit
Labour costs
Transport infrastructure
Model specification

Keywords

  • China
  • Conditional logit estimation
  • Foreign direct investment (FDI)
  • South Korea

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

The determinants of location choice of South Korean FDI in China. / Kang, Sung Jin; Lee, Hongshik.

In: Japan and the World Economy, Vol. 19, No. 4, 01.12.2007, p. 441-460.

Research output: Contribution to journalArticle

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