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Institutions and FDI location choice: The role of cultural distances

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  • Du, Julan
  • Lu, Yi
  • Tao, Zhigang

Abstract

Using an extensive data set on foreign invested enterprises (FIEs) in the Chinese mainland, we compare the sensitivities of the location choice of foreign direct investment (FDI) from six major source countries/areas (Hong Kong, Taiwan, US, EU, Japan and Korea) toward the variation in the strength of economic institutions across China's regions. It is found that FIEs from the source countries/areas that are culturally more remote from China often exhibit a stronger aversion to regions with weaker economic institutions. Moreover, this pattern is often more salient when FDI takes the form of fully-owned enterprises (FOEs) than when it takes the form of joint ventures (JVs).

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 23 (2012)
Issue (Month): 3 ()
Pages: 210-223

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Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:210-223

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Web page: http://www.elsevier.com/locate/asieco

Related research

Keywords: Economic institutions; Culture distance; FDI location choice;

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References

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Cited by:
  1. Nasser Ary Tanimoune & Cécile Batisse & Mary-Françoise Renard, 2013. "Foreign Direct Investment across China: what should we learn from spatial dependences?," Working Papers halshs-00878888, HAL.

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