Deborah L. Swenson: The attraction of foreign investment has been of sustained and high interest by policymakers who are interested in fostering the development of national capital stocks and in encouraging the entry of new firms. For this reason, research on foreign investment decisions has placed considerable effort in estimating the economic factors that influence a local area's ability to attract firms, with particular emphasis attached to the importance of agglomeration economies, wage and labor market conditions, and investment promotion policies since the establishment of investment incentives or the provision of investment zones. More studies have begun to investigate the importance of host location institutional quality in the attraction of foreign investors. Choe and Lee have now entered this research debate, contributing a new question: Does social capital represent an additional factor that shapes foreign investor location decisions?
Choe and Lee's concept of social capital encompasses three social features: (1)...