IDEAS home Printed from https://ideas.repec.org/p/uwa/wpaper/20-10.html
   My bibliography  Save this paper

Cultural Diversity and Foreign Direct Investment

Author

Listed:
  • Wei Feng

    (School of Management and Economics, Southeast University, China)

  • Yanrui Wu

    (Economics Discipline, Business School, University of Western Australia)

  • Yue Fu

    (School of Management and Economics, Southeast University, China)

Abstract

In this paper, we first propose a theoretical model and derive hypotheses about the relationship between cultural diversity and foreign direct investment (FDI). We then test these hypotheses through regression analysis of a dataset of 230 Chinese cities covering the period of 2000-2014. It is shown that cultural diversity and FDI absorption are negatively correlated. The main mechanism is that cultural diversity impedes human capital development and hence obstructs FDI absorption. However, this negative relationship disappears gradually over time. In addition, it is also shown that there are threshold and spatial spillover effects. This research not only enriches the theory of FDI location, but also has implications for FDI policy-making.

Suggested Citation

  • Wei Feng & Yanrui Wu & Yue Fu, 2020. "Cultural Diversity and Foreign Direct Investment," Economics Discussion / Working Papers 20-10, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:20-10
    Note: MD5 = 68e4f8656e95d3e3771e8188593b3f23
    as

    Download full text from publisher

    File URL: https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2020/DP%2020.10_Feng%20Wu%20and%20Fu.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Cultural diversity; FDI absorption; Economic growth; China;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:20-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sam Tang (email available below). General contact details of provider: https://edirc.repec.org/data/deuwaau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.