Development Zones, Foreign Investment, and Global City Formation in Shanghai

Growth and Change

Vol. 36 No. 1 (Winter 2005), pp. 16-40

Development Zones,Foreign Investment,

and Global City Formation in Shanghai

YEHUA DENNIS WEI AND CHI KIN LEUNG

ABSTRACTThe rapid economic ascent of China and the increasing integration of the world

economy in the past two decades have made metropolises in China such as Shanghai and Beijing

emerging global cities. Foreign investment is a central force underlying the emergence and trans-

formation of the Chinese metropolises into global cities. This is especially true in Shanghai, which

has experienced massive infusion of foreign investment. Varied forms of foreign investment or

development zones have been created to promote foreign investment in ows, yet remain under-

studied. This paper analyzes structure, performance, and underlying factors of development zones

in Shanghai, and discusses the implications for global city-formation; it unfolds the variations

among development zones, and illustrates the signi cant role of the state and local conditions. As

the literature on global cities dwells primarily on the experiences of advanced economies, this

paper further contributes to a better understanding of the dynamics of emerging global cities in

the developing world.

IntroductionWhile disagreements exist on the process and impacts, globalization does reduce

barriers to the ow of capital, facilitate cross-country interactions, intensify global

competition, and stimulate global-city formation (Sassen 1991; Short and Kim 1999).

Despite concerns of economic dependence and cultural imperialism, developing countries

increasingly regard foreign investment as a key force for promoting growth in employ-

ment, technology, and trade. Varied forms of foreign investment or development zones,

such as export processing zones (EPZ), duty-free districts, high-tech parks, and offshore

nancial havens, have been created to attract foreign direct investment (FDI) and capital-

ize on globalization. These areas are often the most globalized places and the focus of FDI

Yehua Dennis Wei is an associate professor in the Department of Geography at the University of

Wisconsin at Milwaukee, Milwaukee, Wisconsin. His email address is weiy@uwm.edu. Chi Kin Leung

is a professor in the Department of Geography at California State University, Fresno, California. An

earlier version of this paper was presented at the annual meeting of the Association of American Geo-

graphers, March 5-8, 2003, New Orleans. The authors would like to acknowledge the help of Yuemin

Ning and De Wang for eldwork assistance, research assistance of Jun Luo and Wen Lin, and funding

from the Geography and Regional Science, and China, Taiwan, Mongolia, and Southeast Asia Pro-

grams, National Science Foundation of the United States (Grant BCS-0004357 & BCS-0004281).

Submitted Oct.2003;Revised Feb.2004,Aug.2004.

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