Factors Influencing FDI Location Choice in China's Inland Areas

16 Pages Posted: 30 Apr 2008

See all articles by Laijun Luo

Laijun Luo

affiliation not provided to SSRN

Louis Brennan

Trinity College - Trinity Business School - Institute for International Integration Studies (IIIS)

Chang Liu

Trinity College (Dublin) - School of Business Studies

Yuze Luo

affiliation not provided to SSRN

Abstract

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.

Suggested Citation

Luo, Laijun and Brennan, Louis and Liu, Chang and Luo, Yuze, Factors Influencing FDI Location Choice in China's Inland Areas. China & World Economy, Vol. 16, Issue 2, pp. 93-108, March-April 2008. Available at SSRN: https://ssrn.com/abstract=1126921 or http://dx.doi.org/10.1111/j.1749-124X.2008.00109.x

Laijun Luo (Contact Author)

affiliation not provided to SSRN

Louis Brennan

Trinity College - Trinity Business School - Institute for International Integration Studies (IIIS) ( email )

Trinity Business School
Trinity College
Dublin 2
Ireland

Chang Liu

Trinity College (Dublin) - School of Business Studies ( email )

AAP College Green
Dublin 2
Ireland

Yuze Luo

affiliation not provided to SSRN

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