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Provincial Characteristics and Foreign Direct Investment Location Decision within China

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  • Chen Chunlai

Abstract

Using panel data, a multiple regression model of the location decision of foreign direct investment (FDI) in China is developed and estimated. The results for the period of 1987-94 of China's 29 provinces indicate that provinces with higher GDP, higher per capita income, higher level of accumulated FDI stock, and more intensive transport infrastructure attracted relatively more FDI inflows, while higher efficiency wages deterred FDI inflows. In addition, the regional differentiation in the timing of implementing the open policies for FDI had a strong impact on the provincial distribution of FDI inflows. Finally the implementation of a series of policy measures in the early 1990s had a very strong positive effect on attracting FDI inflows into China across all provinces.

Suggested Citation

  • Chen Chunlai, 1997. "Provincial Characteristics and Foreign Direct Investment Location Decision within China," Chinese Economies Research Centre (CERC) Working Papers 1997-16, University of Adelaide, Chinese Economies Research Centre.
  • Handle: RePEc:adl:cercwp:1997-16
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    File URL: http://www.economics.adelaide.edu.au/research/papers/cerc/cercwp1997-16.pdf
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    Cited by:

    1. Qi, Chun & Tang, John C.S., 2006. "Foreign direct investment: A genetic algorithm approach," Socio-Economic Planning Sciences, Elsevier, vol. 40(2), pages 143-155, June.
    2. Chen, Yanjing, 2009. "Agglomeration and location of foreign direct investment: The case of China," China Economic Review, Elsevier, vol. 20(3), pages 549-557, September.
    3. Roberto, Basile, 2004. "Acquisition versus greenfield investment: the location of foreign manufacturers in Italy," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 3-25, January.
    4. Chen, George Shih-Ku, 2009. "Agglomeration economies and the location of Taiwanese investment in China," MPRA Paper 13896, University Library of Munich, Germany.
    5. repec:tpr:asiaec:v:17:y:2018:i:2:p:94-107 is not listed on IDEAS
    6. Normaz Ismail, 2009. "The Determinant of Foreign Direct Investment in ASEAN: A Semi-Gravity Approach," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(3), pages 710-722, October.
    7. Julian Donaubauer & Christian Dreger, 2018. "The End of Cheap Labor: Are Foreign Investors Leaving China?," Asian Economic Papers, MIT Press, vol. 17(2), pages 94-107, Summer.
    8. Adolfo Cristobal-Campoamor, 2009. "International convergence and local divergence," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(2), pages 527-558, June.
    9. Girma, Sourafel & Gong, Yundan & Görg, Holger, 2009. "What Determines Innovation Activity in Chinese State-owned Enterprises? The Role of Foreign Direct Investment," World Development, Elsevier, vol. 37(4), pages 866-873, April.
    10. Blanc-Brude, Frédéric & Cookson, Graham & Piesse, Jenifer & Strange, Roger, 2014. "The FDI location decision: Distance and the effects of spatial dependence," International Business Review, Elsevier, vol. 23(4), pages 797-810.
    11. George Shih-Ku Chen, 2009. "Determinants Of Taiwanese Investment In China: An Agglomeration Economies-Based Perspective," Monash Economics Working Papers 01-09, Monash University, Department of Economics.
    12. Jun Du & Sourafel Girma, "undated". "Multinationals, Access to Finance and the Exports of Private Firms in China," Discussion Papers 08/03, University of Nottingham, GEP.
    13. Cassidy, John F. & Andreosso-O'Callaghan, Bernadette, 2006. "Spatial determinants of Japanese FDI in China," Japan and the World Economy, Elsevier, vol. 18(4), pages 512-527, December.
    14. Hemmer, Hans-Rimbert & Phuong Hoa, Nguyen Thi, 2002. "Contribution of foreign direct investment to poverty reduction: The case of Vietnam in the 1990s," Discussion Papers in Development Economics 30, Justus Liebig University Giessen, Institute for Development Economics.
    15. Chen, George Shih-Ku, 2009. "Determinants of Taiwanese investment in China: An agglomeration economies-based perspective," MPRA Paper 13894, University Library of Munich, Germany.
    16. Mataloni Jr., Raymond J., 2011. "The structure of location choice for new U.S. manufacturing investments in Asia-Pacific," Journal of World Business, Elsevier, vol. 46(2), pages 154-165, April.
    17. Christer Ljungwall & Martin Linde-Rahr, 2005. "Environmental Policy and the Location of Foreign Direct Investment in China," Governance Working Papers 22020, East Asian Bureau of Economic Research.

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