Subsequent FDI in China : an empirical analysis

Abstract

This dissertation has two major objectives. One is to find out what factors influence the intensity of foreign investors' subsequent investment in China. The other is to find out what factors influence MNEs location determinants in China's hinterland. The methodology: Three sets of data are collected to analyze the research objectives; one is the cross section data in Chapter 4, with the intensity of investment contributed by the foreign party as the dependent variable and some explaining variables as divided by three levels (firm, location and international level). A cross section multiple linear regression analysis was conducted to find out what factors influence the intensity of foreign investors' subsequent investment in China. The second set of data use 16 socioeconomic variables that were classified into three aspects: economic, infrastructure and labour quality (data of 2005) to ascertain 18 hinterland provinces' strength and weakness in each of the three socioeconomic aspects and overall evaluation. The quantitative method used is the principal component analysis (PCA). The third set of data is a panel data set at the city level. It uses the actually FDI flows to 98 hinterland cities from 1999 to 2005 as the dependent variable and a group of FDI related variables as the explaining variables to ascertain factors that contribute to attract more FDI flows into China’s hinterland regions. The econometric method used is the general least squares (GLS) panel data analysis.