Foreign Direct Investment Agglomeration Research Articles

The Effect of FDI Agglomeration on Carbon Emission Intensity: Evidence from City-Level Data in China

How to accelerate the reduction of carbon emissions in the context of the “double carbon” target has become a key concern for all sectors of society. This paper firstly analyzes the influence mechanism of foreign direct investment (FDI) agglomeration on carbon emission intensity, from a theoretical perspective. Then, based on a panel data of 270 cities in China from 2006 to 2019, this paper uses ArcGIS software to visually analyze the spatial and temporal characteristics of FDI agglomeration and carbon emission intensity, and constructs traditional fixed effect models and spatial econometric models for empirical analysis. The results show that, first, FDI agglomeration has a significantly positive impact on the carbon emission intensity of local and neighboring cities with crowding effect. Second, the level of technological innovation can mitigate the crowding effect of FDI agglomeration on carbon emission intensity in local and neighboring cities. Third, there is a negative spatial autocorrelation between the local carbon emission intensity and the carbon emission intensity of neighboring cities. Fourth, the crowding effect of FDI agglomeration on carbon emission intensity is mainly concentrated in the central and western regions. Based on the research conclusions, this paper puts forward corresponding countermeasure suggestions.

The impact of the spatial agglomeration of foreign direct investment on green total factor productivity of Chinese cities

Based on data of 285 Chinese cities from 2003 to 2017, this paper mainly studies the impact of the spatial agglomeration of Foreign direct investment (FDI) on the green total factor productivity(TFP) of Chinese cities by SDM model. It is measured that China's urban green TFP generally has been developing well from 2003 to 2017, and progress in green technology plays an important role in improving urban green TFP. Both global Moran index and local Moran scatter plots show that FDI and green TFP are characterized by strong spatial agglomeration. This suggests green TFP is closely related to the spatial agglomeration of FDI in a region. The paper finds that FDI plays a positive role in promoting green TFP in high-high and high-low cluster cities, and the technology spillover effect of highly agglomerated FDI is more significant than that of decentralized FDI, thus promoting the upgrading and agglomeration of green TFP in itself and surrounding cities. The positive benefits of low-high and low-low cluster cities are not significant. Therefore, it is necessary to go beyond its policy of administrative regions and give full play to radiation effect of High-high FDI agglomeration cities and promote the green TFP of their surrounding cities.

The Threshold Effect of Environmental Regulation, FDI Agglomeration, and Water Utilization Efficiency under “Double Control Actions”—An Empirical Test Based on Yangtze River Economic Belt

In this study, the SE-SBM model considering undesirable outputs was used to measure the water utilization efficiency of the Yangtze River Economic Belt from 2006 to 2016, and the panel threshold model was used to estimate the impact of environmental regulation and foreign direct investment (FDI) agglomeration on water utilization efficiency. The results show that the water utilization efficiency presents a “U”-shaped trend as a whole, declines incrementally along the eastern, central, and western regions of the economic belt, and that the water utilization efficiency of the economic belt first converges and then diverges. In the estimation of the double threshold panel model, when the per capita GDP is lower than 2.635 or greater than 12.058 thousand dollars, the environmental regulation shows a significant positive effect. Otherwise, the environmental regulation barely shows a significant negative effect. FDI has not had a great impact on water resources utilization efficiency, and neither the “pollution aura” nor “pollution shelter” are significant. When the per capita GDP is lower than 2.184 or greater than 12.058 thousand dollars, FDI can significantly improve the water utilization efficiency through environmental regulation. Besides, the positive effects of technological innovation and foreign trade dependence are significant, and so are the negative effects of industrialization. Differentiated environmental regulation policies should be formulated; industrial upgrade should be promoted; innovation of water-saving and emission reduction should be strengthened in the Yangtze River Economic Belt.

Rise of BRICS and Global Investment from the GVCs' Perspective

This paper studies the determinants of foreign direct investment (FDI) and the effect of BRICS on FDI flows to OECD countries. Specifically, we propose an FDI location-decision hypotheses based on Global Value Chains (GVCs) theory and test whether FDI flows to BRICS and OECD are competitive or complementary. The data used in this study is longitudinal (1998–2012) and covers 34 OECD countries. The Benchmark regression shows that the macroeconomic situation, infrastructure and FDI agglomeration all play important roles in FDI decision making. If the BRICS countries are considered as a group, our results suggest that the growing FDI in BRICS group is not at the expense of limiting FDI flows to OECD. Furthermore, FDI flows to Brazil, Russia and South Africa are complementary to OECD's; thus these countries together with OECD are in a global production network. However, FDI flows to China are as a substitute to OECD's, which means multinational corporations consider them as rival sites. FDI flows to India do not have a significant impact on OECD's, which might be the comprehensive outcome of competition effect and Global Value Chains (GVCs) effect.

FDI agglomeration change in China

PurposeNo previous research has considered the changing agglomeration effect of foreign direct investment (FDI). The purpose of this paper is to fill the gap in the literature.Design/methodology/approachThe paper uses China as the object of study and examines the centripetal and centrifugal forces associated with FDI clustering over time.FindingsThrough studying the FDI determinants for the 29 Chinese provinces from 1993 to 2008, the empirical analysis supports a weakening agglomeration effect of FDI over time in China and further suggests that the effect has nearly vanished in the past few years.Research limitations/implicationsData availability restricts the analysis to using provincial aggregate data and so further research is called for. It would provide more accurate and insightful information to study the FDI agglomeration effects at a finer level, using more disaggregated city‐level data by sector and by source country.Originality/valueAs the Chinese government has been making efforts to direct FDI to inland areas, this research provides immediate policy implications. Policy‐makers' investment incentives to direct FDI could go to waste when the agglomeration effect of FDI is too strong. The incentives should be able to achieve a much larger effect when the agglomeration effect becomes less strong.

Size, Location and Agglomeration of Inward Foreign Direct Investment (FDI) in the United States

Halvorsen T. Size, location and agglomeration of inward foreign direct investment (FDI) in the United States, Regional Studies. Since the late 1970s a range of economic development policies to attract foreign direct investments (FDIs) have been tried out. Despite a policy reorientation from a large-size bias to policies also favouring smaller investments, little empirical work has been performed on the determinants of investment size. This paper presents empirical evidence on how the size of FDIs is determined by agglomeration and other state-level factors. The results indicate that FDI agglomeration and urbanization affect investment size and that taxes, markets, labour, land and the concentration of scientific knowledge are important determinants in the size composition of FDI. Halvorsen T. Le montant, la localisation et l'agglomération de l'investissement direct étranger (IDE) aux Etats-Unis, Regional Studies. Depuis la fin des années 1970, on met en vigueur toute une série de politiques de développement économique afin de séduire l'investissement direct étranger. En dépit d'une réorientation de la politique d'une tendance à la taille vers des politiques plutôt en faveur des investissements plus modestes, rares sont les recherches empiriques sur les déterminants du montant de l'investissement. Cet article cherche à présenter des preuves empiriques sur la détermination du montant de l'IDE en fonction de l'agglomération et d'autres facteurs au niveau de l'Etat. Les résultats laissent voir que l'agglomération et l'urbanisation de l'IDE influencent le montant de l'investissement, et que les impôts, les marchés, la main-d'oeuvre, le terrain, et la concentration de la connaissance scientifique sont d'importants déterminants de la structure du montant de l'IDE. Investissement direct étranger (IDE) Economies d'agglomération Montant de l'investissement Etats-Unis Halvorsen T. Umfang, Standort und Agglomeration von ausländischen Direktinvestitionen in den USA, Regional Studies. Seit dem Ende der siebziger Jahre des 20. Jahrhunderts wurden verschiedene Wirtschaftsentwicklungspolitiken zur Anziehung von ausländischen Direktinvestitionen ausprobiert. Trotz einer politischen Umorientierung von einer Bevorzugung umfangreicher Investitionen hin zu einer Begünstigung auch von kleineren Investitionen wurden über die Determinanten für den Umfang der Investition bisher nur wenige empirische Studien durchgeführt. In diesem Beitrag werden empirische Belege zur Frage vorgestellt, wie die Höhe von ausländischen Direktinvestitionen von der Agglomeration und von anderen Faktoren auf Staatsebene bestimmt wird. Aus den Ergebnissen geht hervor, dass sich die Agglomeration und Urbanisierung von ausländischen Direktinvestitionen auf die Investitionshöhe auswirken und dass Steuern, Märkte, das Angebot an Arbeitskräften und Grundstücken sowie die Konzentration von wissenschaftlichem Wissen wichtige Determinanten für die Höhe und Zusammensetzung ausländischer Direktinvestitionen darstellen. Ausländische Direktinvestitionen Agglomerationswirtschaften Investitionshöhe USA Halvorsen T. Tamaño, ubicación y aglomeración de la inversión extranjera directa interna (IDE) en los Estados Unidos, Regional Studies. Desde finales de los setenta se han puesto en marcha una serie de políticas de desarrollo económico para atraer la inversión directa extranjera (IDE). Pese a una reorientación política desde una predisposición de inversiones importantes hacia políticas que también favorecen inversiones más pequeñas, se ha realizado poco trabajo empírico sobre los determinantes del tamaño de las inversiones. En este artículo presentamos evidencia empírica que demuestra que el tamaño de la IDE está determinado por la aglomeración y otros factores a nivel estatal. Los resultados indican que la aglomeración y la urbanización de la IDE afectan al tamaño de la inversión y que los impuestos, los mercados, la mano de obra, el suelo y la concentración de conocimiento científico son determinantes importantes en la composición del tamaño de la IDE. Inversión directa extranjera (IDE) Economías de aglomeración Tamaño de la inversion Estados Unidos

Country-of-origin and industry FDI agglomeration of foreign investors in an emerging economy

Foreign investors access local knowledge by co-locating with other foreign direct investment (FDI) firms. However, different aspects of local knowledge can be obtained from different local businesses. Thus some foreign investors co-locate with FDI firms from the same country of origin, while others co-locate with foreign industry peers. We argue that, relative to industry FDI agglomeration, country-of-origin agglomeration provides an effective channel for the sharing of sensitive and tacit knowledge about local business environments. Therefore foreign investors in need of such local knowledge are more likely to locate in country-of-origin agglomerations. Empirical evidence based on FDI in Vietnam indicates that foreign investors who perceive local institutions as particularly weak, and those with a high degree of outsidership in the local environment, are more likely to seek country-of-origin agglomerations than industry FDI agglomerations.

Strategic Interaction Across Countries and Multinational Agglomeration: An Application to the Cement Industry

Agglomeration in foreign direct investment (FDI) is typically attributed to location-specific characteristics such as natural resource advantages or production-related spillovers between multinational firms. The increasing collocation of the largest global firms in the cement industry since the 1980s is not easily attributed to either of these explanations. This paper draws on theories of multimarket contact to test whether strategic interaction across national markets has influenced the successive market entry decisions generating the observed agglomeration. We first establish that there is indeed nonrandom agglomeration of the six largest cement firms. We next show that preexisting cross-market interaction with current incumbents helps predict which firm will enter a given market and also the choice of market a given firm enters. The association does not appear to be caused by strategic convergence or mimicry of recent entry events and cannot be explained by production side effects, which depend only on local conditions. The findings are consistent with multimarket contact models where collocation allows firms to sustain higher prices in all markets. This latter inference is also supported by evidence of an association between global firm market share and local cement price. The paper suggests that pricing spillovers can serve as an alternative motivation for FDI agglomeration.

Agglomeration Effects in Foreign Direct Investment and the Pollution Haven Hypothesis

Does environmental regulation impair international competitiveness of pollution-intensive industries to the extent that they relocate to countries with less stringent regulation, turning those countries into “pollution havens”? We test this hypothesis using panel data on outward foreign direct investment (FDI) flows of various industries in the German manufacturing sector and account for several econometric issues that have been ignored in previous studies. Most importantly, we demonstrate that externalities associated with FDI agglomeration can bias estimates away from finding a pollution haven effect if omitted from the analysis. We include the stock of inward FDI as a proxy for agglomeration and employ a GMM estimator to control for endogenous time-varying determinants of FDI flows. Furthermore, we propose a difference estimator based on the least polluting industry to break the possible correlation between environmental regulatory stringency and unobservable attributes of FDI recipients in the cross-section. When accounting for these issues we find robust evidence of a pollution haven effect for the chemical industry.