IDEAS home Printed from https://ideas.repec.org/a/bla/asiaec/v30y2016i2p123-145.html
   My bibliography  Save this article

Regional Characteristics, Industry Agglomeration and Location Choice: Evidence from Japanese Manufacturing Investments in Korea

Author

Listed:
  • Ki-Dong Lee
  • Seok-Joon Hwang

Abstract

type="main"> Using extensive firm-level data for the years 1998–2006, we analyze the regional location decision of Japanese manufacturing foreign direct investors in Korea by focusing on the role of agglomeration economies. Our logit estimates indicate that horizontal agglomeration matters in the location decision, but vertical agglomeration does not. Strong evidence of country-of-origin effects is found. Japanese foreign direct investments in high-technology industries show a typical ‘follow-the-leader’ pattern, while those in the in low-technology industries are influenced by regional endowments. In addition, Japan's high-technology firms are likely to prefer urban locations so that they can enjoy the externalities of business services.

Suggested Citation

  • Ki-Dong Lee & Seok-Joon Hwang, 2016. "Regional Characteristics, Industry Agglomeration and Location Choice: Evidence from Japanese Manufacturing Investments in Korea," Asian Economic Journal, East Asian Economic Association, vol. 30(2), pages 123-145, June.
  • Handle: RePEc:bla:asiaec:v:30:y:2016:i:2:p:123-145
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/asej.12087
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fabienne Boudier‐Bensebaa, 2005. "Agglomeration economies and location choice: Foreign direct investment in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(4), pages 605-628, October.
    2. Christian Hilber & Ioan Voicu, 2010. "Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 355-371.
    3. Ki-Dong Lee & Seok-Joon Hwang, 2014. "Regional heterogeneity and location choice of FDI in Korea via agglomeration and linkage relationships," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 19(3), pages 464-487, July.
    4. repec:hal:spmain:info:hdl:2441/10192 is not listed on IDEAS
    5. Cletus C. Coughlin & Eran Segev, 2000. "Location Determinants of New Foreign‐Owned Manufacturing Plants," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 323-351, May.
    6. Pugel, Thomas A & Kragas, Erik S & Kimura, Yui, 1996. "Further Evidence on Japanese Direct Investment in U.S. Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 208-213, May.
    7. Jean‐Francois Hennart & Young‐Ryeol Park, 1994. "Location, governance, and strategic determinants of japanese manufacturing investment in the united states," Strategic Management Journal, Wiley Blackwell, vol. 15(6), pages 419-436, July.
    8. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Investment in the European Union," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 959-972, November.
    9. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    10. repec:hal:wpspec:info:hdl:2441/10192 is not listed on IDEAS
    11. Wilbur Chung & Jaeyong Song, 2004. "Sequential Investment, Firm Motives, and Agglomeration of Japanese Electronics Firms in the United States," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 539-560, September.
    12. James E. Rauch, 2001. "Business and Social Networks in International Trade," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1177-1203, December.
    13. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Firms in the European Union," Sciences Po publications info:hdl:2441/10192, Sciences Po.
    14. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    15. Gao, Ting, 2005. "Labor quality and the location of foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 16(3), pages 274-292.
    16. Fung, K. C. & Iizaka, Hitomi & Parker, Stephen, 2002. "Determinants of U.S. and Japanese Direct Investment in China," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 567-578, September.
    17. Belderbos, Rene & Carree, Martin, 2002. "The Location of Japanese Investments in China: Agglomeration Effects, Keiretsu, and Firm Heterogeneity," Journal of the Japanese and International Economies, Elsevier, vol. 16(2), pages 194-211, June.
    18. Shaoming Cheng & Roger Stough, 2006. "Location decisions of Japanese new manufacturing plants in China: a discrete-choice analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(2), pages 369-387, June.
    19. Hideki Yamawaki, 2006. "The location of American and Japanese multinationals in Europe," International Economics and Economic Policy, Springer, vol. 3(2), pages 157-173, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samani, Ali Riahi & Mishra, Sabyasachee & Golias, Mihalis & Lee, David J.-H., 2023. "What influences the location choice of establishments? An analysis considering establishment types and activities interactions," Journal of Transport Geography, Elsevier, vol. 111(C).
    2. Lei Luo & Zhenhua Zheng & Jing Luo & Yuqiu Jia & Qi Zhang & Chun Wu & Yifeng Zhang & Jia Sun, 2020. "Spatial Agglomeration of Manufacturing in the Wuhan Metropolitan Area: An Analysis of Sectoral Patterns and Determinants," Sustainability, MDPI, vol. 12(19), pages 1-23, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Chih-Hai Yang & Chung-Yueh Chiu & Meng-Wen Tsou, 2017. "Location Choice of Multinational and Local Firms in Vietnam: Birds of a Feather Flock Together?," The Japanese Economic Review, Japanese Economic Association, vol. 68(1), pages 95-114, March.
    3. 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.
    4. Chen, George Shih-Ku, 2009. "Agglomeration economies and the location of Taiwanese investment in China," MPRA Paper 13896, University Library of Munich, Germany.
    5. Norifumi Kawai, 2011. "The Role of Institutional Conditions in Japanese FDI in European Transition Economies," Chapters, in: Werner Pascha & Cornelia Storz & Markus Taube (ed.), Institutional Variety in East Asia, chapter 11, Edward Elgar Publishing.
    6. Blanc-Brude, Frédéric & Cookson, Graham & Piesse, Jenifer & Strange, Roger, 2014. "The FDI location decision: Distance and the effects of spatial dependence," International Business Review, Elsevier, vol. 23(4), pages 797-810.
    7. Jacob A. Jordaan, 2012. "Agglomeration and the location choice of foreign direct investment: new evidence from manufacturing FDI in Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 27(1), pages 61-97.
    8. Kandogan, Yener, 2012. "Regional foreign direct investment potential of the states within the US," Journal of Economics and Business, Elsevier, vol. 64(4), pages 306-322.
    9. Schäffler, Johannes & Hecht, Veronika & Moritz, Michael, 2014. "Regional determinants of German FDI in the Czech Republic : evidence from a gravity model approach," IAB-Discussion Paper 201403, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Chidlow, Agnieszka & Holmström-Lind, Christine & Holm, Ulf & Tallman, Steve, 2015. "Do I stay or do I go? Sub-national drivers for post-entry subsidiary development," International Business Review, Elsevier, vol. 24(2), pages 266-275.
    11. Siedschlag, Iulia & Smith, Donal & Turcu, Camelia & Zhang, Xiaoheng, 2009. "What Determines the Attractiveness of the European Union to the Location R&D Multinational Firms?," Papers DYNREG46, Economic and Social Research Institute (ESRI).
    12. C. Dembour, 2008. "Competition for Business Location: A Survey," Journal of Industry, Competition and Trade, Springer, vol. 8(2), pages 89-111, June.
    13. Veronika Hecht, 2017. "Location choice of German multinationals in the Czech Republic," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(4), pages 593-623, October.
    14. Jonas Kleineick & Andrea Ascani & Martijn Smit, 2020. "Multinational investments across Europe: a multilevel analysis," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 40(1), pages 67-105, April.
    15. Andrea Ascani & Riccardo Crescenzi & Simona Iammarino, 2015. "Economic Institutions and the Location Strategies of European Multinationals in their Geographical Neighbourhood," LEQS – LSE 'Europe in Question' Discussion Paper Series 97, European Institute, LSE.
    16. Xuepeng Liu & Mary E. Lovel & Jan Ondrich, 2017. "Does Final Market Demand Elasticity Influence the Location of Export Processing? Evidence from Multinational Decisions in China," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 12, pages 199-226, World Scientific Publishing Co. Pte. Ltd..
    17. Chen, George Shih-Ku, 2009. "Determinants of Taiwanese investment in China: An agglomeration economies-based perspective," MPRA Paper 13894, University Library of Munich, Germany.
    18. Hideki Yamawaki, 2006. "The location of American and Japanese multinationals in Europe," International Economics and Economic Policy, Springer, vol. 3(2), pages 157-173, November.
    19. Luigi Benfratello & Davide Castellani & Anna D’Ambrosio, 2019. "Migration and the Location of MNEs Activities. Evidence from Italian Provinces," John H Dunning Centre for International Business Discussion Papers jhd-dp2019-04, Henley Business School, University of Reading.
    20. Mayer, T. & Mejean, I. & Nefussi, B., 2010. "The location of domestic and foreign production affiliates by French multinational firms," Journal of Urban Economics, Elsevier, vol. 68(2), pages 115-128, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:asiaec:v:30:y:2016:i:2:p:123-145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/eaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.