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Trade costs and location of foreign firms in China

Author

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  • Amiti, Mary
  • Javorcik, Beata Smarzynska

Abstract

The authors examine the determinants of entry by foreign firms using information on 515 Chinese industries at the provincial level during 1998-2001. The analysis, rooted in the new economic geography, focuses on market and supplier access within and outside the province of entry, as well as production and trade costs. The results indicate that market and supplier access are the most important factors affecting foreign entry. Access to markets and suppliers in the province of entry matters more than access to the rest of China, which is consistent with market fragmentation due to underdeveloped transport infrastructure and informal trade barriers.

Suggested Citation

  • Amiti, Mary & Javorcik, Beata Smarzynska, 2005. "Trade costs and location of foreign firms in China," Policy Research Working Paper Series 3564, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3564
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    More about this item

    Keywords

    TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Economic Theory&Research; Environmental Economics&Policies; Trade and Regional Integration; Access to Markets;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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