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Exploring the significance of domestic investment for foreign direct investment in China: A city-network approach

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  • Shuai Shi

    (University of Reading, UK)

  • Ronald Wall

    (The University of the Witwatersrand, South Africa and Erasmus University Rotterdam, Netherlands)

  • Kathy Pain

    (University of Reading, UK)

Abstract

This article uses a network approach and a negative binomial regression model (NBRM) to shed light on the association between Domestic Investment (DI) and Foreign Direct Investment (FDI) in interlinking Chinese cities in a space of flows. The empirical analysis is based on 2743 FDI and 9315 DI projects covering 77 Chinese cities. We address the question of what the association is between DI network measures and city attractiveness for FDI, and if the geographic distance of DI matters. While the physical distance of DI activity is found to have a negative association with FDI, city functional proximity and structural position in the DI network are found to have a positive association. We conclude that strategic policies to stimulate cross-territorial economic ties between Chinese cities should be advantageous in attracting inward foreign investment.

Suggested Citation

  • Shuai Shi & Ronald Wall & Kathy Pain, 2019. "Exploring the significance of domestic investment for foreign direct investment in China: A city-network approach," Urban Studies, Urban Studies Journal Limited, vol. 56(12), pages 2447-2464, September.
    • Handle: RePEc:sae:urbstu:v:56:y:2019:i:12:p:2447-2464
    DOI: 10.1177/0042098018795977
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    3. Hechang Cai & Zhijun Feng & Wen Zhou & Jinghan Chen & Zinan Chen, 2023. "Understanding the spatial polarization pattern of technology transfer network in the Guangdong–Hong Kong–Macao Greater Bay area," Growth and Change, Wiley Blackwell, vol. 54(1), pages 4-25, March.
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    7. Weiyang Zhang & Ben Derudder, 2019. "How sensitive are measures of polycentricity to the choice of ‘centres’? A methodological and empirical exploration," Urban Studies, Urban Studies Journal Limited, vol. 56(16), pages 3339-3357, December.
    8. Ben Derudder, 2021. "Network Analysis of ‘Urban Systems’: Potential, Challenges, and Pitfalls," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 112(4), pages 404-420, September.
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