Determinants of Locations of Foreign Direct Investment in China

Shaomin Li (First Author), Seung Ho Park (Participant Author), 李少民 (Participant Author)

Research output: Contribution to journalJournal


This study examines the factors that affect the choice of location for foreign direct investment (FDI) in China. We identify three groups of factors that may affect the location choice by foreign firms: agglomeration economies, infrastructure, and institutional changes resulting from the economic reform. The study utilizes the most recent data from China's industrial census for the empirical testing. The findings show that agglomeration economies, in particular the clustering of foreign firms and domestic firms, exert the strongest effect on FDI location. Higher FDI concentration tends to attract more foreign firms. The clustering of domestic firms exerts a negative effect on FDI locations. Better infrastructure (electricity, telecommunications, and road) and greater institutional change (open policies, privatization, and legal development) also show positive effects on FDI location. The size of the local economy does not seem to affect the choice of location of FDI.
Original languageEnglish
Pages (from-to)95-119
JournalManagement and Organization Review
Issue number1
Publication statusPublished - 2006

Corresponding author email,


  • 制度变迁
  • 区域分布
  • 基础设施
  • 外商直接投资
  • 集群效应

Indexed by

  • Scopus
  • SSCI


Dive into the research topics of 'Determinants of Locations of Foreign Direct Investment in China'. Together they form a unique fingerprint.

Cite this