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Corruption, Governance and FDI Location in China : A Province-Level Analysis

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  • Matthew Cole
  • Robert Elliott
  • Jing Zhang

Abstract

China's recent rapid growth has been matched by large increases in exports and foreign direct investment (FDI), but considerable regional disparities in FDI flows exist. We use detailed province level data for China to examine the determinants of intra-country FDI flows. Specifically, we investigate whether FDI is attracted to those regions that exhibit good governance and are most strongly engaged in the fight against corruption, constructing proxies for provincial government efficiency and anti-corruption effort. Our regression results confirm that FDI is attracted to provinces with relatively high levels of government efficiency and are actively involved in the fight against corruption.

Suggested Citation

  • Matthew Cole & Robert Elliott & Jing Zhang, 2008. "Corruption, Governance and FDI Location in China : A Province-Level Analysis," Discussion Papers 08-06, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:08-06
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    More about this item

    Keywords

    FDI; corruption; governance;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal

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