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The Determinants of Foreign Direct Investment (FDI): the Case of the Chinese Provinces during the Economic Transition

  • Mario Biggeri

    ()

    (Università degli Studi di Firenze)

Foreign Direct Investment (FDI) is considered a relevant factor of Chinese economic growth particularly for the coastal region. The aim of this paper is to understand what determined the location of FDI in China during the economic transition from the early 1980’s up to the Asian crisis. In order to examine which factors affected the amount of FDI received by the provinces an empirical analysis based is carried out. The estimates are obtained through a panel analysis utilising a panel data set at provincial level. The empirical findings emphasise that in addition to factors usually considered in the literature -such as market access, market profitability, strategic location, production costs, factor endowments, agglomeration effect, policy promotion, political stability, etc. …- a higher FDI inflow is determined also by the level of institutional changes towards marketisation.

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File URL: http://193.205.129.80/repec/cme/wpaper/cmetwp_11_2012.pdf
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Paper provided by c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione in its series Working Papers with number 1211.

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Length: 21 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:cme:wpaper:1211
Contact details of provider: Web page: http://www.cmet05.it

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  1. Cao Yuanzheng, & Qian, Yingyi & Weingast, Barry, 1998. "From Federalism, Chinese Style, to Privatization, Chinese Style," CEPR Discussion Papers 1838, C.E.P.R. Discussion Papers.
  2. Chow, G.C., 1990. "Capital Formation And Economic Growth In China," Papers 67, Princeton, Woodrow Wilson School - Discussion Paper.
  3. Mohsin S. Khan & Zuliu Hu, 1996. "Why is China Growing so Fast?," IMF Working Papers 96/75, International Monetary Fund.
  4. Fuss, Melvyn & McFadden, Daniel & Mundlak, Yair, 1978. "A Survey of Functional Forms in the Economic Analysis of Production," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 4 McMaster University Archive for the History of Economic Thought.
  5. Jeffrey D. Sachs & Wing Thye Woo, 1997. "Understanding China's Economic Performance," NBER Working Papers 5935, National Bureau of Economic Research, Inc.
  6. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
  7. Chen, Jian & Fleisher, Belton M., 1996. "Regional Income Inequality and Economic Growth in China," Journal of Comparative Economics, Elsevier, vol. 22(2), pages 141-164, April.
  8. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
  9. Gastanaga, Victor M. & Nugent, Jeffrey B. & Pashamova, Bistra, 1998. "Host Country Reforms and FDI Inflows: How Much Difference do they Make?," World Development, Elsevier, vol. 26(7), pages 1299-1314, July.
  10. 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.
  11. Martin Raiser, 1998. "Subsidising inequality: Economic reforms, fiscal transfers and convergence across Chinese provinces," Journal of Development Studies, Taylor & Francis Journals, vol. 34(3), pages 1-26.
  12. Helleiner, G.K., 1989. "Transnational corporations and direct foreign investment," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 27, pages 1441-1480 Elsevier.
  13. Fleisher, Belton M. & Chen, Jian, 1997. "The Coast-Noncoast Income Gap, Productivity, and Regional Economic Policy in China," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 220-236, October.
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