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Agglomeration economies and location choice of Korean manufacturers within the United States

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  • Ki-Dong Lee
  • Seok-Joon Hwang
  • Min-hwan Lee

Abstract

Employing the micro data for 1997–2004, we investigate the location decision of Korean-affiliated manufacturing investments in the United States. The conditional logit estimates confirm that although industry-specific Korean agglomeration and domestic agglomeration play an important role, the Foreign Direct Investment (FDI) location is more sensitively affected by the interstate difference in endowment conditions than by the same nationality agglomeration. Both business service and intermediate good agglomeration are main determinants of FDI location. Furthermore, estimation results show substantial change in the location pattern after recovery from the Asian financial crisis. We find quite different patterns of location decision across industry groups; dispersion forces work greater than the agglomeration force in the consumer goods industry, forward linkages with US upstream firms can be seen in the assembly and processing industry, and typical follow-the-leader pattern mixed with market potential effect by Korean immigrants is seen in the basic material manufacturing industry.

Suggested Citation

  • Ki-Dong Lee & Seok-Joon Hwang & Min-hwan Lee, 2012. "Agglomeration economies and location choice of Korean manufacturers within the United States," Applied Economics, Taylor & Francis Journals, vol. 44(2), pages 189-200, January.
    • Handle: RePEc:taf:applec:v:44:y:2012:i:2:p:189-200
    DOI: 10.1080/00036846.2010.502109
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    1. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    2. Masahisa Fujita & Tomoya Mori, 2005. "Frontiers of the New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 377-405, August.
    3. Hilber, Christian A. L. & Voicu, Ioan, 2006. "Agglomeration economies and the location of foreign direct investment: quasi-experimental evidence from Romania," LSE Research Online Documents on Economics 3574, London School of Economics and Political Science, LSE Library.
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    1. Iimi,Atsushi & Humphrey,Richard Martin & Melibaeva,Sevara, 2015. "Firm productivity and infrastructure costs in east Africa," Policy Research Working Paper Series 7278, The World Bank.
    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.
    3. Iimi,Atsushi, 2021. "Firm Productivity and Locational Choice : Evidence from Mozambique," Policy Research Working Paper Series 9727, The World Bank.
    4. Iimi,Atsushi & Humphreys,Richard Martin & Melibaeva,Sevara, 2015. "Firms? locational choice and infrastructure development in Tanzania : instrumental variable spatial autoregressive model," Policy Research Working Paper Series 7305, The World Bank.
    5. 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.
    6. Iimi,Atsushi & Humphrey,Richard Martin & Melibaeva,Sevara, 2015. "Firms? locational choice and infrastructure development in Rwanda," Policy Research Working Paper Series 7279, The World Bank.
    7. 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.
    8. Romana Korez-Vide & Patrick Voller & Vito Bobek, 2014. "German and Austrian Foreign Direct Investment in Brazilian Regions: Which Are the Location Choice Factors?," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 5(4), pages 68-81, November.

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