Information costs, agglomeration economies and the location of foreign direct investment in China1

Abstract

He C. (2002) Information costs, agglomeration economies and the location of foreign direct investment in China, Reg. Studies 36, 1029–1036. Foreign investors suffer from adverse information asymmetry and face internal and external uncertainties in host economies. Better access to information and a variety of agglomeration economies could attenuate the disadvantages that foreign investors encounter. Statistical results strongly buttress the argument that foreign investors are inclined to favour such locations that could minimize information costs and offer a variety of agglomeration economies. Theoretical and policy implications and further research directions are discussed at the end. 1 This paper was presented at the 63rd Annual Meeting of the Association of Pacific Coast Geographers, Sept. 13–16, 2000, Arcata, CA.