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WHAT ATTRACTS FOREIGN MULTINATIONAL CORPORATIONS TO CHINA?
Author(s) -
Zhang Kevin Honglin
Publication year - 2001
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/19.3.336
Subject(s) - foreign direct investment , multinational corporation , boom , china , panel data , international economics , business , incentive , distribution (mathematics) , international trade , government (linguistics) , economics , market economy , macroeconomics , political science , mathematical analysis , linguistics , philosophy , mathematics , finance , environmental engineering , law , engineering , econometrics
After adopting the open‐door policy, China experienced a boom of inward foreign direct investment (FDI) by multinational corporations. This article attempts to assess effects of location characteristics and government policies on FDI flows during the period 1987–98. A model of FDI determinants is specified and estimated with cross‐section and panel data. The estimates indicate that China's huge market size, liberalized FDI regime, and improving infrastructure are attractive to multinationals. The regional distribution of FDI within China is influenced largely by FDI incentives and historical‐cultural links with foreign investors, along with other location factors.