Intra-metropolitan location of foreign direct investment in Wuhan, China: Institution, urban structure, and accessibility

Coastal cities have been at the forefront of China’s economic reform and open-door policy. However, regional differences in cost and income have prompted the government to encourage interior development since the late 1990s. Foreign direct investment (FDI) is one of the most mobile forms of capital and is a key agent of urban spatial transformation in China. This paper examines intra-metropolitan location of FDI location in interior China through a study of Wuhan, the largest metropolitan area in central China and the gateway to China’s north-south and east-west linkages. We find that FDI in Wuhan has become more concentrated over time and is centralized on the Wuhan Economic and Technological Development Zone, a national development zone. Combining the logistic model with geographically weighted regression, we examine the effects of institution and urban structure, in addition to the orthodox location factors (accessibility) on the FDI location. We find that FDI in Wuhan is a result of interaction among institution, urban structure, and accessibility. Also, easy access to road and the central business districts (CBDs) has positive impacts on the FDI location. Last, the importance of urban spatial structure is identified through the significance of the traditional auto industrial base, Hanyang, in the FDI