Agglomeration, Backward and Forward Linkages: Evidence from South Korean Investment in China

27 Pages Posted: 21 Apr 2010

See all articles by Peter Marcel Debaere

Peter Marcel Debaere

University of Virginia - Darden School of Business; Centre for Economic Policy Research (CEPR)

Joonhyung Lee

University of Texas at Austin - Department of Economics

Myungho Paik

Hanyang University - College of Policy Science

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Abstract

With a firm-level data set, we study the location decision of South Korean multinationals across China's regions. Our conditional logit estimates confirm agglomeration effects along industry and along national lines. We add an upstream and downstream (backward and forward) linkage effect. We find that the presence of upstream and downstream South Korean affiliates significantly increases the likelihood that a South Korean multinational invests in a particular region. However, linkages that do not differentiate by nationality do not seem to matter much. As such, our analysis of investors' location choice brings together two perspectives: linkages and agglomeration along national lines.

(A partir d'une base de données au niveau de l'entreprise, on étudie la localisation de firmes plurinationales sud-coréennes dans les régions de la Chine. Les résultats d'une analyse de type logit confirment qu'il existe des effets d'agglomération tant dans l'axe industriel que national. Quand on ajoute les effets en amont et en aval, on découvre que la présence d'affiliés sud-coréens en amont et en aval accroît de manière significative la probabilité qu'une firme plurinationale sud-coréenne investisse dans une région particulière. Cependant les liens qui ne discriminent pas selon l'axe de la nationalité ne semblent pas avoir grande importance. L'analyse des décisions de localisation d'investissement synthétise deux perspectives: liens et agglomération selon l'axe de la nationalité.)

Suggested Citation

Debaere, Peter Marcel and Lee, Joonhyung and Paik, Myungho, Agglomeration, Backward and Forward Linkages: Evidence from South Korean Investment in China. Canadian Journal of Economics/Revue canadienne d'économique, Vol. 43, No. 2, pp. 520-546, May/mai 2010, Available at SSRN: https://ssrn.com/abstract=1593278 or http://dx.doi.org/10.1111/j.1540-5982.2010.01582.x

Peter Marcel Debaere (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/html/direc_detail.aspx?styleid=2&id=5794

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Joonhyung Lee

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

Myungho Paik

Hanyang University - College of Policy Science ( email )

222 Wangsimni-ro Seongdong-gu
Seoul, 04763
Korea, Republic of (South Korea)

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