The Locational Behaviour of Foreign Direct Investment: Evidence from Johannesburg, South Africa

This article represents a contribution to the limited scholarship on understanding the locational behaviour of foreign direct investment (FDI) in Africa. Against a background review of international research and debates on locational decision-making of foreign investors at both international (particularly within the developing world) and national scales of analysis, the profile and patterns of foreign investment in Johannesburg are documented and the key factors influencing investor location choice are analysed. Although investors from 34 countries are represented in Johannesburg, the leading ten investor countries, headed by USA, Germany and UK, account for 85% of all investments. An emerging trend is for the growth of FDI from India, China and the Middle East. Reasons given by foreign investors for selecting Johannesburg as an investment destination largely mirror the international experience of location decision-making by foreign investors. Johannesburg is shown to be the preferred choice for business operation both in South Africa and the broader southern African region because of several agglomeration factors which relate to the city's position as economic hub, financial centre and core market of southern Africa.     

Sectoral differences in the determinants of the location of foreign direct investment in American manufacturing

Foreign direct investment in the United States is an integral part of the competition among global industrial core regions. Most foreign investment in the U.S. originates in Europe, Canada, and Japan. Acquisition rather than new plant establishment is the favored mode of investment and the interregional supply of potential acquisition candidates constrains foreign investors' locational choices. This paper provides an analysis of the location of foreign employment in 15 disaggregated sectors across U.S. states in 1990. The results show that foreign firms concentrate employment in existing regions of production. Foreign investments in most raw materials processing sectors particularly favor these places. Some decentralization has occurred in several sectors, especially food, paper, chemicals and petroleum, rubber and plastics, stone, clay and glass products, and primary metals. Other significant determinants of location include labor force characteristics and certain regional preferences. No evidence was found in our analysis of disaggregate sectors that foreign investors avoid strong unions more than their domestic counterparts.     

Location of foreign manufacturers in China: Agglomeration economies and country of origin effects

Using data from China, this article finds that agglomeration economies derived from the clustering of manufacturing and foreign investment activities, combined with better access to markets, influence the location of foreign manufacturers. Foreign enterprises are attracted to cities with investment incentives, but they avoid high labour cost locations. The locational patterns also suggest country of origin effects. American, Hong Kong and Taiwanese manufacturers tend to value access to domestic markets, while Japanese investors favour port cities. Further analysis indicates the presence of origin of country effects at the sectoral level.Received: 7 May 2002, Accepted: 12 November 2002, JEL Classification: F23, O18, O53Special thanks go to Jessie Poon, Zhaoyong Zhang, Breandán Ó hUallacháin and three anonymous reviewers for their constructive comments and suggestions. Any remaining errors belong to the author.     

我国房地产行业的外资参与及其影响

当前,外来投资者正在快速且全面进入我国房地产市场的各个环节,受到各方的广泛关注.本文总结了进入中国房地产行业的外资来源和投资形式,分析了我国房地产行业利用外资的现状和表现,认为日趋成熟的市场环境、丰富的投资机会和逐渐清晰可控的房地产投资风险是当前外资进入我国房地产市场的主要原因.同时提出,应该肯定外资的引入有利于推动我国房地产行业的竞争和成熟;也应对外资进行政策引导,保持我国房地产市场发展的独立和稳健.     

Worker and firm heterogeneity,agglomeration, and wages in Brazil

This paper analyses the influence of agglomeration and spatial sorting on wages in Brazilian cities. The empirical strategy is based on a two-step estimation. The first step estimates a wage equation with the observed characteristics of workers and firms and location effects. The second step decomposes the location effects into employment density and fixed effects of firm and worker. We estimate an urban wage premium for a developing country with the simultaneous inclusion of worker and firm fixed effects, instrumental variables, and nighttime lights. We find agglomeration effects of 4.3–5.7%, which are larger than those obtained for developed countries.     

Foreign direct investment in American service sectors: source country contrasts and locational determinants

Foreign direct investment in United States service sectors is an essential component of the competition among global industrial core regions. European, Canadian, and Japanese firms generate most foreign services jobs. Acquisition is the favored mode of entry and foreign establishments are generally larger and pay higher wages than their domestic counterparts. Though the surge of foreign investment in the 1980s was sectorally extensive, jobs in foreign services firms grew much faster than those in manufacturing. This paper reports a regression analysis of the location of foreign employment in six disaggregated sectors across U.S. states in 1987. The results show that foreign and domestic interstate locational patterns of employment strongly correlate. Because acquisition is the most common mode of entry, this empirical finding suggests that the supply of acquisition candidates primarily decides foreign investors' locational choices. Additional influences on location include the concentration of jobs in foreign business and professional services firms in localized areas of production, a general attraction of foreign investors in most service sectors to states with skilled labor forces, and an avoidance of Rocky Mountain and Great Plains states. I found little evidence that foreign investors in services avoid high-wage states more than their domestic counterparts.     

Impact on urban form by the localization of railway stations: Evidence from Sweden

Since the 1990s a number of new railway stations have been established in Sweden on new or rerouted lines, while other stations have been reconstructed at their original locations. Some stations were located in urban surroundings, others in semi-urban or peripheral locations depending on the trade of between regional speed, and local urban circumstances. The urban form consequences depending on station localisation of these transport infrastructure investments are nonetheless unknown. In order to provide a basis for future planning, this research aims to provide knowledge on urban form consequences of relocating railway stations. 13 stations were selected in a case study. Changes in urban densities from 1993 to 2013 were analysed by a combination of kernel techniques and estimation of monocentric density models. Stations within an urban and semi-urban environments show strong agglomeration tendencies. Within peripheral environments, the urban development was unclear or even negative. In an urban environment, the location of the station still attracted more urban resources compared to the location of the urban density centre. These findings should be understood in the light of a market-oriented socio-economic context since 1990th influencing the planning system and the development of urban form.     

Micro‐evidence on the determinants of innovation in the Netherlands: The relative importance of absorptive capacity and agglomeration externalities

Although the benefits of clustering for innovation have received much attention in the theoretical as well as empirical literature, analyses at the regional level often disregard the characteristics of local firms. We tackle both at the same time: agglomeration externalities (Marshall, Porter, Jacobs) from census microdata, and firm data from the Community Innovation Survey. Importantly, we allow for sectoral heterogeneity of agglomeration forces. We find that the firm characteristics, including those that proxy for ‘absorptive capacity’, have a much stronger relationship with the propensity to innovate than regular agglomeration externalities. The latter are only statistically significant for a few specific sectors, and even then only for some types of innovation. Sorting of innovation‐prone firms into specific locations might therefore be much more important to explain spatial patterns of innovation than agglomeration externalities.     

Agglomeration economies and firm R&D efforts: an analysis of China’s electronics and telecommunications industries

China is on the way toward an innovation-oriented economy as well as a manufacturing powerhouse. R&D investments play a central role in improving China’s industrial competitiveness. This study conducts empirical analysis to test the role of agglomeration economies in R&D efforts using plant-level data of the electronic and telecommunication equipment manufacturing industry in 2007. Statistical results suggest that both localization and urbanization economies significantly affect firm R&D. Downstream sectors are the major driving force of business R&D. Downstream firms are more likely to generate externalities than upstream ones. Upstream and midstream agglomerations even generate negative externalities due to preemption.     

Optimal zoning of a mixed duopoly

This paper studies the optimal zoning of a mixed duopoly when the objective function of the public firm is a weighted sum of its profits and social surplus. We find that a regulator may attain the optimal locations of both firms by restricting the location of the private firm only. There is no need to limit the location of the public firm. In contrast, in a private duopoly, the regulator needs to restrict the locations of both firms.     

开发商的住宅开发区位选择偏好

开发商区位决策实际上是开发商对不同区位的收益和风险进行权衡的过程。与大多基于完全理性和企业同质视角的现有研究不同,本文从行为经济学和企业异质性假设入手,以杭州市为研究区域,基于前景理论的思想设计开发商调查问卷,探讨区位因素和开发商规模因素对开发商偏好的影响。本文试图从收益和风险大小的判断、效用曲线、参照点、最低收益要求和最高风险容忍度这几个方面入手,详细剖析开发商在区位选择中的权衡过程。根据问卷调查结果,本文依次进行开发商偏好与区位的单因素方差分析,以及开发商偏好和区位、企业规模的双因素方差分析。结果显示:区位因素对开发商偏好有显著影响,且这种影响主要源于开发商区位参照点差异;"名声效应"降低了开发商在市中心开发时的损失感;开发企业规模因素对开发商区位选择偏好无显著影响;开发商的风险容忍度是稳定的。     

Spatial Cournot competition in a circular city with directional delivery constraints

This paper analyzes spatial Cournot competition in a circular city with a directional delivery constraint, which means that a firm can only deliver its product in one direction. It reveals that, contrary to the standard result, the unique location equilibrium involves duopoly firms agglomerating at the same location when they deliver products in different directions or when the direction decisions are made endogenously. We point out that spatial agglomeration emerges from a central point of view for a firm in a circular city, showing relaxing quantity competition through cost differentiation.     

An integrated production-stage analysis on market areas and supply areas

An integrated framework of the market-area and supply-area systems is applied to four representative hypothetical scenarios to demonstrate the effect of changes in spatially constrained economic factors on firm location. It is initially clarified that there is a mutual mechanism of both types of area in the integrated-framework approach by applying spatial duality theory. The analysis then explores single-center and multi-center models together with a notion of trade-off interaction between agglomeration economies and transportation costs. Finally, the model is extended to a case of the irregular spatial formation of market areas and corresponding supply areas where agglomeration economies are observed.     

The location of governmental facilities and equilibrium urban configuration

Most existing models of spatial agglomeration economics do not include the effects of the governmental sector in an urban configuration, although the governmental sector plays an important role in economic activity. We discuss how an exogenous distribution of locations of governmental facilities and the level of service provided affect the equilibrium urban configuration under the assumption that governmental service is necessary component for production of goods by a firm. The model yields multiple equilibrium urban configurations endogenously, depending on the set of parameters, and that the governmental sector is responsible for the movement of equilibrium market land rents stemming from its determination of location.Comments and suggestions by anonymous referees are gratefully acknowledged. A preliminary draft of this paper was presented at The Second Summer Institute of the Pacific Regional Science Organization, held on July 20–23, 1992, in Taipei, Taiwan, R.O.C. I thank to M. Fujita and H. Koide for helpful comments and suggestions.     

Modelling residential location choice in an area with spatial barriers

A model is presented for residential location choice in rural areas with spatial barriers. We address the problem through comparative static analysis focusing on how residential location choices are affected by a new road link across the spatial barrier. We proceed through a probability theoretical approach: choose a family of utility functions representing every possible location, and equip this family with a probability measure. Then choose a representative within an equivalence class of utility functions, and represent the probability distribution by a parametrized family of distributions. Our analysis demonstrates that investments in new road links do not necessarily represent an adequate instrument for achieving ambitions in regional policy. We identify reasonable situations where a new road link could just as easily generate net migration from the area in which the investments are directed. In general, our analysis demonstrates how agglomeration and centralisation tendencies can be considerably affected by transportation infrastructure innovations. Received: June 1999/Accepted: June 2001 This paper benefited from comments by Bj?rn Sandvik and Lars-G?ran Mattsson.     

The evolution of regional multi-pole growth

Regional multi-pole growth is an important spatial form of regional economic organization pattern. We construct a model of regional multi-pole growth evolution to study its mechanism based on the assumption of heterogeneous space and inseparability of the economic subject. The study concludes that the evolution of regional multi-pole growth is affected by factors such as transportation costs, economies of scale, the crowding-out effect, and the factor endowments of superior location and inferior location. Based on the condition that the factor endowment of a location remains the same, with an increased economy of scale effect and a decline in the marginal production cost advantage, location will strengthen the agglomeration layout, which does not help form regional multi-pole growth patterns. With an increase of the crowding-out effect and a decline in the marginal production cost disadvantage, location will strengthen the dispersed layout, which fosters the formation of the regional multi-pole growth pattern. When transportation costs are high, a decline in such costs strengthens the links among locations, fostering the evolution of the regional spatial organization form to shift from dispersion to agglomeration. However, when transportation costs are somewhat reduced, their further reduction leads the regional spatial organization pattern into dispersion. Therefore, under certain conditions and with a decline in transportation costs, regional multi-pole growth weakens first and then strengthens.     

Agglomeration dynamics of business services

An important characteristic of the economic development in Europe and North America during the last few decades is a fast expansion of the business-service sector. The present paper aims at modeling the location dynamics of three categories of firms: (i) knowledge-intensive business-service firms, (ii) ordinary business-service firms and other firms, where the latter form the rest of the economy. In the theoretical framework, business-service firms have random-choice preferences and respond in a non-linear way to time distances in their contact efforts to customer firms. Business-service firms make their location decisions in response to local, intra-regional and extra-regional access to market demand. The econometric analysis makes use of information about time distances between zones in urban areas as well as between urban areas in the same agglomeration and between urban areas in different agglomerations. The empirical analysis shows how the number of jobs in the different sectors change in response to accessibility to purchasing power. The estimation results show that the change processes feature non-linear dependencies with varying spatial reach.     

The agglomeration of U.S.-owned and foreign-owned plants across the U.S. States

Agglomeration in U.S. manufacturing is more common than initially thought. This clustering arises from location natural advantages and spillovers. Extant studies on agglomeration do not distinguish the activities of U.S.-owned plants from those that are foreign owned. This distinction is crucial since policies seem to have differential impacts on both types of plants. I find that industry scale, resource intensity and urbanization economies have larger impacts on foreign plant agglomeration whereas knowledge intensity has a larger effect on domestic plant agglomeration. Received: September 2001/Accepted: April 2002 I would like to thank the UNO University Committee on Research for support of this project and Ke Yang for invaluable research assistance. The paper has benefited from the comments made by an anonymous referee. The usual caveats apply.     

Tax effects in a two‐region model of monopolistic competition

I examine how unit tax and ad valorem tax affect firm location in a monopolistic‐competition model with asymmetrically sized regions and a quasi‐linear preference. Tax revenue is evenly distributed to all workers or evenly distributed to the workers residing in the region generating the tax revenue. When a homogeneous good is traded, despite reimbursement systems, the ad valorem tax retains the firm share, while the unit tax accelerates firm agglomeration in the larger region. When the homogeneous good is nontradable, despite taxation schemes, the intraregional distribution retains the firm share, while the interregional one accelerates agglomeration in the larger region.