Location of Foreign Enterprises: Untangling the Influence of Ethnic Ties and Same-Country Agglomeration

Saileshsingh Gunessee, Yanxue Sun () and Chang Liu ()
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Yanxue Sun: Nottingham University Business School China
Chang Liu: School of Economics, University of Nottingham

No 2014-05, RIEI Working Papers from Xi'an Jiaotong-Liverpool University, Research Institute for Economic Integration

Abstract: With an information costs and network approach, this paper studies the role of historical social ethnic ties in the location of foreign enterprises in the presence of same-country agglomeration. Using the natural setting of South Korean investment in China, historical ethnic ties are found to impinge on the link between samecountry agglomeration and foreign industrial location. The findings show a trade-off between these two factors where social ethnic ties matter more in the initial years and same-country agglomeration matters in later years. As such the first result is a cautionary note as to what same-country agglomeration is capturing, while the second finding tells of the time varying importance of ethnic ties.

Keywords: Ethnic ties; Networks; Agglomeration; Information costs; Foreign direct investment. (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-01-01, Revised 2016-09-06
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