Heterogeneous preferences in the location choices of Japanese investors in China: A mixed logit approach

This dissertation presents an empirical investigation on Japanese investors' location choices in China and their heterogeneous preferences in those choices. In this study, disaggregate firm-level Japanese greenfield manufacturing foreign direct investment (FDI) data are calibrated with a mixed logit model, the new advance of discrete choice models. Special attention is paid to the evolution of Japanese investors' location choices with respect to China's recent reorientation of its economic development strategy from its eastern coastal region to its western interior area. The primary policy theme of the reorientation is to attract FDI to China's interior areas in hopes of promoting their economic growth and reducing regional disparity. Based on empirical analysis, the effectiveness of policies previously adopted in this reorientation is evaluated, and future policy recommendations are proposed.; This dissertation also provides a systematic methodological approach to detect and verify preference variations in Japanese plant location decisions. The mixed logit model is applied for the first time in the plant location search problem, in light of the model's superior ability to integrate both observable and unobservable taste variations into the analysis. This application entirely transforms previous arbitrary and presumptive approaches in preference heterogeneity studies.; This dissertation significantly advances knowledge on the spatial distribution of FDI at the intra-country level in general and in China in particular. Intra-country distribution of FDI has been surprisingly ignored in both theoretical and empirical research, in contrast to inter-country level studies. In addition, this dissertation also satisfies the urgent needs of China's ongoing adjustments to FDI-favored policies to boost economic growth in the interior western region through FDI utilization and the redirection of China's FDI policy focus.; The primary and exclusive focus in this dissertation on Japanese greenfield manufacturing FDI may qualify the generalization of the research findings, but the research design, methodology, and policy analysis may serve as a basis for future similar studies.