Trade Costs and Location of Foreign Firms in China
March 1, 2005
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Summary
This study examines the determinants of entry into by foreign firms, using information on 515 Chinese industries at the provincial level during 1998-2001. The analysis, rooted in the new economic geography, focuses on market and supplier access within and outside the province of entry, as well as production and trade costs. The results indicate that market and supplier access are the most important factors affecting foreign entry. Access to markets and suppliers in the province of entry matters more than access to the rest of China, which is consistent with market fragmentation due to underdeveloped transport infrastructure and informal trade barriers.
Subject: Foreign corporations, Foreign direct investment, Trade barriers, Transportation, Wages
Keywords: WP
Pages:
25
Volume:
2005
DOI:
Issue:
055
Series:
Working Paper No. 2005/055
Stock No:
WPIEA2005055
ISBN:
9781451860740
ISSN:
1018-5941
