Development zones, foreign investment, and global city formation in Shanghai

The 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 transformation 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 inflows, 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 significant 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.