We investigate how intergovernmental ties at subnational levels between home and host countries influence the intensity and location of foreign direct investment (FDI) inflows. We focus on an intriguing type of subnational tie, namely, International Friendship (Sister) Cities. A sister city is a decentralized form of intergovernmental relationship that provides a platform by which a multinational corporation (MNC) can approach a local government, customers, and clients to acquire localized information and political capabilities. We argue that cities with a sister-city relationship attract more FDIs than other similar cities within a host country. The benefit extends to the national level as MNCs have higher FDI levels in host countries with a greater number of sister cities with their home country. We further investigate whether the effect of sister cities on an MNC’s country selection is greater when host-country subnational governments have a higher degree of autonomy relative to the national government, and lesser when governments have a higher level of policy uncertainty. Using data from the 1990–2009 period, we find consistent support for our ideas as tested at two levels of analysis: a city-level matched sample analysis on Japanese FDI inflows, and a country-level analysis on Japanese MNCs’ country selection.

我们调查了本国和东道国之间的国家以下各级政府间关系如何影响外国直接投资（FDI）流入的强度和位置。我们专注于一种有趣的国家以下类型的纽带，即国际友谊（姐妹）城市。姊妹城市是一种分散的政府间关系形式，它提供了一个平台，跨国公司（MNC）可以通过该平台与地方政府，客户和客户取得联系，以获取本地化的信息和政治能力。我们认为，具有姐妹城市关系的城市比东道国其他类似城市吸引的外国直接投资更多。由于跨国公司在东道国拥有较高的姊妹城市，东道国的外国直接投资水平较高，因此惠益扩大到了国家一级。我们进一步调查当东道国的地方政府相对于国家政府具有较高的自治程度时，姊妹城市对跨国公司的国家选择的影响是否较大，而当政府的政策不确定性较高时，这种影响较小。使用1990-2009年期间的数据，我们发现我们的想法得到了一致的支持，并在两个分析水平上进行了检验：对日本FDI流入的城市水平匹配样本分析，以及对日本跨国公司的国家选择的国家水平分析。