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Determinants of Taiwanese investment in China: An agglomeration economies-based perspective

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  • Chen, George Shih-Ku

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.

Suggested Citation

  • Chen, George Shih-Ku, 2009. "Determinants of Taiwanese investment in China: An agglomeration economies-based perspective," MPRA Paper 13894, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:13894
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    Keywords

    Agglomeration economies; China; Taiwanese investment;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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