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Trade costs and location of foreign firms in China

Author:	Amiti, Mary; Javorcik, Beata Smarzynska;	Collection Title:	Policy, Research working paper ; no. WPS 3564
Country:	China;	Date Stored:	2005/04/21
Document Date:	2005/04/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	East Asia and Pacific
Report Number:	WPS3564	SubTopics:	Environmental Economics & Policies; Economic Theory & Research; Free Trade; Trade and Regional Integration; Access to Markets
Volume No:	1 of 1

Summary: The authors examine the determinants of entry by foreign firms using information on 515 Chinese industries at the provincial level during 1998-2001. The analysis, rooted in the new economic geography, focuses on market and supplier access within and outside the province of entry, as well as production and trade costs. The results indicate that market and supplier access are the most important factors affecting foreign entry. Access to markets and suppliers in the province of entry matters more than access to the rest of China, which is consistent with market fragmentation due to underdeveloped transport infrastructure and informal trade barriers.


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