Congestion costs and differences in the regional distribution of FDI in China

Hongzhong Fan, Shah Muhammad Kamran, Mingliang Li () and Qiliang Zhou
Additional contact information
Hongzhong Fan: Huazhong University of Science and Technology
Shah Muhammad Kamran: Huazhong University of Science and Technology
Mingliang Li: Huazhong University of Science and Technology
Qiliang Zhou: Huazhong University of Science and Technology

Quality & Quantity: International Journal of Methodology, 2017, vol. 51, issue 4, No 20, 1789-1809

Abstract: Abstract After implementing the reforms and opening up policies, China has continued to attract huge amount of foreign direct investments (FDI), but these FDI have a noticeably unbalanced spatial distribution. Why does FDI flow mostly into eastern China? Agglomeration economies and congestion costs play an important role in the spatial distribution of FDI in the country. Panel data was compiled for 287 prefectural-level cities and higher administrative units in China from 1999 to 2012 while controlling the effects of regional advantages, preferential policies, natural resources, infrastructure and other factors. Regression results verified that a high agglomeration of FDI in the eastern region of China is significantly attributed to the effects of congestion costs. Because of the particularities of the Chinese labour market and the monopolization of land market in cities, congestion costs lose the ability to regulate the spatial distribution of FDI and exert a reverse effect to distribute FDI more unevenly. In order to further open up inland regions and facilitate coordinated development between regions, the government must implement some preferential policies that encourage the flow of FDI into inland regions.

Keywords: Congestion costs; Economies of agglomeration; Foreign direct investment; Panel data; Spatial distribution (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11135-016-0366-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0366-6

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/11135

DOI: 10.1007/s11135-016-0366-6

Access Statistics for this article

Quality & Quantity: International Journal of Methodology is currently edited by Vittorio Capecchi

More articles in Quality & Quantity: International Journal of Methodology from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().