Locational Concentration of Foreign Direct Investment in China: a Cluster Factor-Based Analysis

The aim of the paper is to detect the spatial concentration of foreign direct investment (FDI) inflows to China and to interpret the emerging FDI spatial clustering using determinants proposed by economic theory and empirical research. The cluster statistical method has been applied for defining spatial hierarchies of FDI, while the one-way ANOVA statistical technique is applied for establishing the economic factors explaining it. The results show that the spatial hierarchical FDI concentration differs from the one defined by administrative boundaries, some spatial clusters are rather unstable over time, and agglomeration benefits accruing from investment, infrastructure, and market growth is the main determinant of the spatial FDI concentration in China. The originality of the paper stems from the application of the cluster methodology for defining and interpreting the FDI spatial hierarchies in China. © 2016, Springer Science+Business Media New York.