The determinants of location choice of South Korean FDI in China

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64 Citations (Scopus)


By using extensive and unique firm-level data for South Korean foreign affiliates in China, we investigated the determinants of location choice for South Korean multinational companies. South Korean companies are unevenly distributed inside China with more than 60 percent of their affiliates being located in the three northeast regions. Using conditional logit estimation, we found that market size and government policies approximated by economic zones, quality of labor, and transport infrastructure play a positive role in deciding location. On the other hand, labor costs, inner waterways, and distance show negative and significant coefficients. Finally, the model specification is shown to be robust to possible violation of the assumption of identical independent error terms. Some of the estimation results stand in contrast to those of other studies on the determinants of FDI stock flows from the world or Japan.

Original languageEnglish
Pages (from-to)441-460
Number of pages20
JournalJapan and the World Economy
Issue number4
Publication statusPublished - 2007 Dec

Bibliographical note

Copyright 2007 Elsevier B.V., All rights reserved.


  • China
  • Conditional logit estimation
  • Foreign direct investment (FDI)
  • South Korea

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations


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