Location Determinants of Foreign Clustering Investment: An Empirical Research

Foreign Clustering Investment (FCI) is FDI agglomeration with industrial linkages. Based on extant literatures, this paper proposes a scale which consists of 14 items for measurement of FCI location determinants. Based on a survey of 106 foreign firms in Kunshan, Wujiang and Pinghu, the exploratory factor analysis reveals its structure. The empirical results indicate that, in addition to the traditional location-specific factors and cost-driving factors, firm agglomeration and industry linkage should also be included in the location determinants of FCI. This paper provides guidelines for further study from the aspects of factorial system and structure.