Foreign-Specific Agglomerations and the Location of Taiwanese Direct Investment in China

Abstract

This study investigates the interactions between provincial characteristics and foreign-specific agglomerations on Taiwanese investors' location choice in China. Using firm-level data, we find that nationality agglomeration and Asian agglomeration have non-negligible impacts on these investors. Furthermore, we find that their location choice follows a sequential selection process. These findings suggest that a region-wide development strategy is a more effective means of attracting these investors than province-specific fiscal concessions and preferential treatment.