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The role of labour cost in the location choices of Japanese investors in China

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  • Shaoming Cheng

Abstract

. This article attempts to reconcile previous conflicting findings about the effects of labour cost on the location decisions of foreign investors in China. A conditional logit model is calibrated with its compatible disaggregated firm‐level Japanese FDI data. It is hypothesised that previous counter‐intuitively positive relationships between labour cost and incoming FDI in China may result from the failures to properly control spatial inflation differentials, labour quality, and quality of life. A Hausman‐McFadden test is also conducted to test the robustness of the calibrated models.

Suggested Citation

  • Shaoming Cheng, 2006. "The role of labour cost in the location choices of Japanese investors in China," Papers in Regional Science, Wiley Blackwell, vol. 85(1), pages 121-138, March.
    • Handle: RePEc:bla:presci:v:85:y:2006:i:1:p:121-138
    DOI: 10.1111/j.1435-5957.2006.00066.x
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    References listed on IDEAS

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    1. Jan Ondrich & Michael Wasylenko, 1993. "Foreign Direct Investment in the United States: Magnitudes and Location Choice of New Manufacturing Plants," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number fdius, November.
    2. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, January.
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    Cited by:

    1. Roger Strange & Igor Filatotchev & Yung-chih Lien & Jenifer Piesse, 2009. "Insider Control and the FDI Location Decision," Management International Review, Springer, vol. 49(4), pages 433-454, September.
    2. Yao, Yao & Chen, George S. & Zhang, Lin, 2021. "Local financial intermediation and foreign direct investment: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 198-216.
    3. repec:rre:publsh:v:38:y:2008:i:3:p:395-415 is not listed on IDEAS
    4. Nielsen, Bo Bernhard & Asmussen, Christian Geisler & Weatherall, Cecilie Dohlmann, 2017. "The location choice of foreign direct investments: Empirical evidence and methodological challenges," Journal of World Business, Elsevier, vol. 52(1), pages 62-82.
    5. Jonathan Jones, 2017. "Agglomeration economies and the location of foreign direct investment: A meta-analysis," Journal of Regional Science, Wiley Blackwell, vol. 57(5), pages 731-757, November.
    6. Raimund Krumm & Harald Strotmann, 2013. "The impact of regional location factors on job creation, job destruction and employment growth in manufacturing," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 23-48, February.
    7. Taichi Mutoh & Koji Kotani & Makoto Kakinaka, 2020. "An overseas business paradox: Are Japanese general contractors risk takers?," PLOS ONE, Public Library of Science, vol. 15(9), pages 1-26, September.
    8. Primandita Fitriandi & Makoto Kakinaka & Koji Kotani, 2014. "Foreign direct investment and infrastructure development in Indonesia: Evidence from province level data," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 4(1), pages 79-94, January.
    9. Chin-Tsai Lin & Meng-Chuan Tsai, 2010. "Location choice for direct foreign investment in new hospitals in China by using ANP and TOPSIS," Quality & Quantity: International Journal of Methodology, Springer, vol. 44(2), pages 375-390, February.
    10. Meng-Chuan Tsai & Chin-Tsai Lin, 2012. "Selecting an Optimal Region by Fuzzy Group Decision Making: Empirical Evidence from Medical Investors," Group Decision and Negotiation, Springer, vol. 21(3), pages 399-416, May.
    11. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.
    12. Raimund Krumm & Harald Strotmann, 2010. "The Impact of Regional Supply and Demand Conditions on Job Creation and Destruction," IAW Discussion Papers 61, Institut für Angewandte Wirtschaftsforschung (IAW).
    13. Yuan, Lin & Pangarkar, Nitin & Wu, Jie, 2016. "The interactive effect of time and host country location on Chinese MNCs’ performance: An empirical investigation," Journal of World Business, Elsevier, vol. 51(2), pages 331-342.
    14. Adamson, Dwight W. & Waugh, Andrew, 2012. "Farm Operator Entry and Exit Behavior: A Longitudinal Analysis," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124053, Agricultural and Applied Economics Association.
    15. Shaoming Cheng, 2007. "Structure of Firm Location Choices: An Examination of Japanese Greenfield Investment in China," Asian Economic Journal, East Asian Economic Association, vol. 21(1), pages 47-73, March.

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