Does Spatial Clustering of Foreign Direct Investment Foster Global Production Networks? The Case of Qingdao, China

This article examines how spatial clustering of foreign direct investment (FDI) can foster a global production network (GPN). The cluster concept, in general, stressed inter-firm relations between local and regional firms while neglecting global--local linkages in the spatial context. In contrast, GPN focuses on the advantages of international production organization and governance structure but underestimates regional or localized channels of production arrangement. By integrating the conceptual framework of spatial clustering of FDI and GPN, this paper provides empirical evidence of various channels to knowledge and innovation transfer between domestic firms and foreign-invested enterprises. This paper demonstrates that the different types of linkages formation are key determinant factors for establishing cluster through contributing to local economic development.