Trade Costs and Location of Foreign Firms in China

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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Bibliographic Details
Main Authors: Amiti, Mary, Javorcik, Beata Smarzynska
Language:English
Published: World Bank, Washington, DC 2005-04
Subjects:ACCESS TO MARKETS, AGGREGATE DEMAND, AGRICULTURE, AUDITS, AVERAGE TARIFF, BARRIERS TO ENTRY, BORDER BARRIERS, COMMERCE, COMPARATIVE ADVANTAGE, COMPETITIVENESS, CONSUMER GOODS, CONSUMERS, CUSTOMS, DOMESTIC FIRMS, DUTY DRAWBACKS, DYNAMIC EFFECTS, ECONOMIC ANALYSIS, ECONOMIC GEOGRAPHY, ECONOMIC GROWTH, ECONOMIC IMPACT, ECONOMIC RELATIONS, ELASTICITY, ELASTICITY OF SUBSTITUTION, EMPIRICAL ANALYSIS, EMPLOYMENT, EQUILIBRIUM, EXPORT COMPETITIVENESS, EXPORTS, FACTOR PRICES, FACTORS OF PRODUCTION, FINAL GOODS, FISH, FOREIGN DIRECT INVESTMENT, FOREIGN ENTRY, FOREIGN FIRMS, FOREIGN INVESTMENT, FOREIGN INVESTORS, FOREIGN PRODUCERS, FOREIGN TRADE, FREE ENTRY, FREE TRADE, GDP, GROWTH RATE, HIGH TARIFFS, IMPORTED INPUTS, IMPORTED INTERMEDIATE, IMPORTED INTERMEDIATES, IMPORTS, INTERMEDIATE INPUTS, INTERNAL MARKET, INTERNAL TRADE, INTERNAL TRADE BARRIERS, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, INVESTMENT CLIMATE, INVESTMENT DECISION, INVESTMENT FLOWS, LABOR COSTS, MARGINAL COST, MARGINAL COST CONDITION, MARGINAL REVENUE, MARKET ACCESS, MARKET ACCESS EFFECT, MARKET DEVELOPMENT, MARKET FRAGMENTATION, MARKET INTEGRATION, MARKET POTENTIAL, MARKET POWER, MARKET SIZE, MARKET SIZE EFFECTS, MULTINATIONAL ENTERPRISES, MULTINATIONAL FIRMS, NATIONAL MARKET, NATIONAL OUTPUT, OPENNESS, POLICY INSTRUMENTS, POLLUTION, POSITIVE EXTERNALITIES, PRICE INDEX, PRODUCTION COSTS, PRODUCTIVITY, PROFIT MAXIMIZATION, PROTECTIONISM, REGIONAL DEVELOPMENT, REGIONAL INTEGRATION, SPECIALIZATION, STANDARD ERRORS, STOCKS, SUPPLIERS, TARIFF RATES, TAX INCENTIVES, TOTAL OUTPUT, TOTAL REVENUE, TRADE BARRIERS, TRADE COSTS, TRADE DATA, TRADE RESTRICTIONS, TRADE THEORY, TRANSNATIONAL CORPORATIONS, TRANSPORT COST, TRANSPORT COSTS, UTILITY FUNCTION, VALUE OF EXPORTS, VALUE OF OUTPUT, WAGES, WORLD INVESTMENT, ZERO PROFITS,
Online Access:http://documents.worldbank.org/curated/en/2005/04/5752808/trade-costs-location-foreign-firms-china
https://hdl.handle.net/10986/8989
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