Where FDI Goes in Decentralized Authoritarian Countries: The Politics of Taiwanese Site Selection for Investment in Mainland China

China is a unique case of decentralized authoritarianism due to its combination of fiscal decentralization and the cadre promotion system as incentive-institutions for attracting FDI inflows. This book explores the determinants of FDI location in authoritarian countries like China, the impact of fiscal autonomy on FDI, and the implications of adversarial investment, especially as it diffuses from coastal cities to the interior regions of decentralized authoritarian countries.

Format: Hardback
Length: 216 pages
Publication date: 30 May 2023
Publisher: The University of Michigan Press

China stands out among decentralized authoritarian regimes due to its remarkable emergence as a major recipient of foreign direct investment (FDI), boasting one of the highest levels of fiscal decentralization worldwide. Moreover, its combination of fiscal decentralization and a cadre promotion system serves as an incentive-institution for attracting substantial FDI inflows. This unique combination sets China apart from other authoritarian countries.

China's significance in empirical investigations of the impact of fiscal autonomy on adversarial investment arises from its status as the largest investment destination for its long-term adversary, Taiwan. Taiwanese FDI plays a significant role in mainland China, making it crucial to study the differences between Taiwanese FDI and other FDI in terms of their allocation patterns.

In this book, we delve into the following questions:

What factors determine the location of FDI in authoritarian countries like China? Fiscal decentralization has been posited as a driving force behind the surge in FDI inflows in China, owing to its influence on local governments' incentives. However, is the impact of fiscal autonomy on FDI uniform across different administrative levels in China, particularly considering the dynamic variations in FDI inflows at the lower levels, particularly in light of China's distinctive cadre management system?

Do the effects of fiscal decentralization on FDI strengthen, weaken, or remain constant when attracting FDI inflows from adversarial states? And what are the implications of such adversarial investment, particularly as it spreads from coastal cities to the interior regions or from key cities to peripheral regions of decentralized authoritarian countries?

By examining these questions, this book aims to provide valuable insights into the complex dynamics of FDI allocation in authoritarian contexts, shedding light on the factors that shape investment patterns and their implications for economic development and governance in these countries.

Dimension: 229 x 152 (mm)
ISBN-13: 9780472075928