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Factors Influencing FDI Location Choice in China's Inland Areas
Author(s) -
Luo Laijun,
Brennan Louis,
Liu Chang,
Luo Yuze
Publication year - 2008
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2008.00109.x
Subject(s) - foreign direct investment , china , multinational corporation , business , incentive , economies of agglomeration , preference , investment (military) , economic geography , natural resource , panel data , international trade , geography , economics , economic growth , market economy , political science , archaeology , finance , politics , law , econometrics , macroeconomics , microeconomics
Since 1978, the bulk of foreign direct investment (FDI) has gone to the south‐eastern coastal areas in China, with only a small portion received inland. With the launch of the Western Development Strategy in 2000 and the Central China Rising Strategy in 2004, the choice of investment locations has expanded to inland areas. Based on panel data covering 98 inland cities from 1999 to 2005, this study identifies location preference variables for FDI invested in China's inland areas, and finds that well‐established factors such as natural resources and low labor costs are not important factors in determining FDI locations within China's inland. Instead, policy incentives and industrial agglomeration are the most important factors. The findings of the present study have policy implications for both host country authorities and multinational corporations.