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Location of Foreign Enterprises: Untangling the Influence of Ethnic Ties and Same-Country Agglomeration

Author

Listed:
  • Gunessee, Saileshsingh

    (Nottingham University Business School China,)

  • Sun, Yanxue

    (Nottingham University Business School China)

  • Liu, Chang

    (School of Economics, University of Nottingham)

Abstract

With an information costs and network approach, this paper studies the role of historical social ethnic ties in the location of foreign enterprises in the presence of same-country agglomeration. Using the natural setting of South Korean investment in China, historical ethnic ties are found to impinge on the link between samecountry agglomeration and foreign industrial location. The findings show a trade-off between these two factors where social ethnic ties matter more in the initial years and same-country agglomeration matters in later years. As such the first result is a cautionary note as to what same-country agglomeration is capturing, while the second finding tells of the time varying importance of ethnic ties.

Suggested Citation

  • Gunessee, Saileshsingh & Sun, Yanxue & Liu, Chang, 2014. "Location of Foreign Enterprises: Untangling the Influence of Ethnic Ties and Same-Country Agglomeration," RIEI Working Papers 2014-05, Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration, revised 06 Sep 2016.
    • Handle: RePEc:xjt:rieiwp:2014-05
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    File URL: http://58.210.89.21/RePEc/xjt/working-papers/RIEI-WP_2014-05.pdf
    File Function: First version, 2014
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    More about this item

    Keywords

    Ethnic ties; Networks; Agglomeration; Information costs; Foreign direct investment.;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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