Global Firm Expansion and the Rise of Consumer Cities in South and Southeast Asia

Global production is increasingly relocating to South and Southeast Asia, reshaping the economic trajectories of cities across the region. This paper studies the determinants and urban consequences of multinational firm entry into these emerging economies. Using firm-level data from the ORBIS database and Meta’s commuting zones, we track 1,401 establishments opened by 306 Forbes Global 2000 “superstar firms” across 650 commuting zones in 15 South and Southeast Asian countries, 2015–2022.

In Stage 1, we estimate a two-step location-choice model: whether firms enter the region and, conditional on entry, which country and commuting zone they select. Entry is shaped by geographic proximity, cultural ties, prior network presence, and local infrastructure and agglomeration. The US–China trade war serves as an exogenous shock: firms with greater Section 301 tariff exposure became significantly more likely to relocate to the region in 2019 and again in 2022.

In Stage 2, we use predicted entry from Stage 1 as an instrument for actual entry to identify causal effects on destination cities. Doubling the past three years of firm entry raises current-year nighttime light intensity by 8% and the local restaurant count by 33%, while restaurants serving the home cuisine of entering firms grow more than tenfold. Average effects on air pollution are small and ambiguous, but pollution rises sharply in cities with little renewable-energy infrastructure and falls in cities with abundant access. Using engineering-based solar, wind, and hydropower potentials to instrument the clean-energy share, we show that renewable infrastructure substantially mitigates the environmental cost of rapid firm-driven growth.