Regional Decentralisation and Location of Foreign Direct Investment in China
China's economic transition is essentially a two-pronged decentralisation process: power and fiscal decentralisation from central to local government and shift of decision making from governments to firms and households. Using FDI flow data at the provincial level from 1995 to 2002, this study finds that provinces with more authority in economic matters and hardening fiscal budget constraints have a larger FDI inflow. Market decentralisation may significantly improve the investment environment and attract foreign investment while government interference in economic activities could discourage foreign investment. In addition, more legal spending in a province is associated with a smaller FDI inflow while subsidies to loss-making SOEs could bring more foreign investment.
Volume (Year): 18 (2006)
Issue (Month): 1 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CPCE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CPCE20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Demurger, Sylvie & Sachs, Jeffrey D. & Woo, Wing Thye & BAO, Shuming & Chang, Gene, 2002. "The relative contributions of location and preferential policies in China's regional development: being in the right place and having the right incentives," China Economic Review, Elsevier, vol. 13(4), pages 444-465, December.
- Cletus C. Coughlin & Eran Segev, 2000.
"Foreign Direct Investment in China: A Spatial Econometric Study,"
The World Economy,
Wiley Blackwell, vol. 23(1), pages 1-23, 01.
- Cletus C. Coughlin & Eran Segev, 1999. "Foreign direct investment in China: a spatial econometric study," Working Papers 1999-001, Federal Reserve Bank of St. Louis.
- Tao Zhang & Heng-fu Zou, 1996.
"Fiscal decentralization, public spending, and economic growth in China,"
Policy Research Working Paper Series
1608, The World Bank.
- Zhang, Tao & Zou, Heng-fu, 1998. "Fiscal decentralization, public spending, and economic growth in China," Journal of Public Economics, Elsevier, vol. 67(2), pages 221-240, February.
- Tao Zhang & Heng-fu Zou, 2001. "Fiscal decentralization, public spending, and economic growth in China," CEMA Working Papers 58, China Economics and Management Academy, Central University of Finance and Economics.
- Chien-Hsun Chen, 1996. "Regional determinants of foreign direct investment in mainland China," Journal of Economic Studies, Emerald Group Publishing, vol. 23(2), pages 18-30, May.
- Bevan, Alan & Estrin, Saul & Meyer, Klaus, 2004. "Foreign investment location and institutional development in transition economies," International Business Review, Elsevier, vol. 13(1), pages 43-64, February.
- Yingqi Wei & Xiaming Liu & David Parker & Kirit Vaidya, 1999. "The Regional Distribution of Foreign Direct Investment in China," Regional Studies, Taylor & Francis Journals, vol. 33(9), pages 857-867.
- Li, Shaomin & Vertinsky, Ilan & Zhou, Dongsheng, 2004. "The emergence of private ownership in China," Journal of Business Research, Elsevier, vol. 57(10), pages 1145-1152, October.
- Qian, Yingyi & Roland, Gerard, 1998.
"Federalism and the Soft Budget Constraint,"
American Economic Review,
American Economic Association, vol. 88(5), pages 1143-62, December.
- Knight, J. & Shi, L., 1995. "Fiscal Decentralisation, Redistribution and Reform in China," Economics Series Working Papers 99168, University of Oxford, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:taf:pocoec:v:18:y:2006:i:1:p:33-50. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.