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Determinants Of Taiwanese Investment In China: An Agglomeration Economies-Based Perspective

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  • George Shih-Ku Chen
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    Abstract

    We investigate the impact of agglomeration economies on the distribution of Taiwanese investment in China for the period 1996-2005. We find that the uneven distribution of Taiwanese investment can be explained by agglomeration economies related to industrial linkages, labour-market pooling and monitoring costs. Furthermore, we find evidence that the nature of agglomeration forces attracting Taiwanese investment not only differs across regions but also changes over time. Importantly, we find mild evidence that this investment is affected by a `market crowding effect', or that the benefit from agglomeration decreases once the market size exceeds a critical threshold.

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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2009/0109determinantschen.pdf
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    Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 01-09.

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    Length: 39 pages
    Date of creation: Aug 2009
    Date of revision:
    Handle: RePEc:mos:moswps:2009-01

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    Keywords: Agglomeration economies; China; Taiwanese investment;

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