Does Foreign Direct Investment Lead to Industrial Agglomeration?
2017/12/05
研討會日期 : 2017-12-05
時間 : 14:30
主講人 : Professor Wen-Tai Hsu (許文泰)
主持人 : Professor Shin-Kun Peng
地點 : Conference Room B110
演講者簡介 : Professor Hsu received his Ph.D. in Economics from University of Minnesota in 2008. He is currently an Associate Professor at Singapore Management University. His research interests are Urban and Regional Economics, International Economics, Applied Micro Theory, and Industrial Organization.
演講摘要 : This paper studies the effect of foreign direct investment (FDI) on industrial agglomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, and using both the Ellison-Glaeser index and geographic Gini as measures of industrial agglomeration, we find that FDI actually affects agglomeration negatively. This result is somewhat counter-intuitive, as the conventional wisdom tends to think that FDI capital/firms attract domestic firms to cluster around them for various agglomeration benefits, technological spillovers in particular. To reconcile our empirical findings and the conventional wisdom, we develop a theory of FDI and agglomeration based on two counter-veiling force. On the one hand, technology diffusion from FDI attracts domestic firms to be around them; on the other hand, fiercer competition drives firms away. Our theory indicates that which force dominates depends on the scale of the economy. When the scale of the economy is small, FDI promotes agglomeration because competition is not fierce; otherwise, FDI promotes dispersion. Our evidence also shows that the FDI deregulation also leads to lower markups, sales, and profits of firms, consistent with the mechanism of the theory.
