SCIENTIA GEOGRAPHICA SINICA ›› 2012, Vol. 32 ›› Issue (12): 1439-1443.doi: 10.13249/j.cnki.sgs.2012.012.1439

• Orginal Article • Previous Articles     Next Articles

Location Determinants of Foreign Clustering Investment:An Empirical Research Based on Confirmatory Factor Analysis

Qing-xi WANG(), Wei-xiang XU, Heng-fu ZHU   

  1. School of Economics and Management, Zhejiang University of Technology, Hangzhou, Zhejiang 310023, China
  • Received:2012-03-14 Revised:2012-07-16 Online:2012-12-20 Published:2012-12-20


FDI (foreign direct investment) location selection is an important subject in international economics and transnational business field. Following the seminal work of Dunning (1973), many researchers have been persisting in contributing to it. Such type of study is advanced along with related theoretical progress and changing circumstances of international economy, and has been far from ended yet. Today, FDI has evolved differently from its original form. One of its development trends is growing into foreign clustering investment (FCI) introduced in this article, which is agglomeration of foreign direct investment through industrial linkages. In comparison with traditional FDI, FCI has two distinctive characteristics, i.e., firm agglomeration and industrial linkages. This means that they may be different in location selection. With respect to FCI location determinants, extant literature has some shortcomings. For instance, little literature has listed location-specific attributes completely and identified their dimensions explicitly; most of literature has depended on second and aggregate data collecting at regional or industrial level. The aim of this study is to investigate latent dimensions of location-specific attributes and factors influencing location decision of foreign clustering investment, so it can be expected to make up for the defects of previous research to a certain extent. Under a review of extant literature, this study proposes that there are four dimensions constituting FCI determinants system, i.e., location conditions, inputs cost, firm agglomeration, and industrial linkages. Then this study put forward a 13-item measurement scale to capture the four dimensions. Through a survey of 106 foreign firms coming from three counties of Kunshan, Wujiang and Pinghu in Yangtze River delta, the confirmatory factor analysis confirms FCI determinant dimensions proposed above. The empirical results indicate that, in addition to traditionally location-specific and cost-driven factors, firm agglomeration and industry linkage should also be taken into consideration of location determinants of FCI. The implication of this study is that future studies should incorporate such dimensions as firm agglomeration and industry linkage into location determinants of FCI-type foreign direct investment, and then they can get relatively correct and complete results.

Key words: foreign clustering investment, location determinants, confirmatory factor analysis

CLC Number: 

  • F119.9