Hong, E., Sun, L., and Li, T :
068_DP86 Location of Foreign Direct Investment in China: A Spatial Dynamic Panel Data Analysis by Country of Origin
JEL Classification:
F21; F23; H73; P33
Abstract:
China's emergence as a global trade power is characterized by the dominance of foreign-funded firms in Chinese exports. This paper develops a spatial dynamic panel-data model to explain the salient features of FDI locational and temporal dynamics across Chinese provinces over 1990-2002. While the traditional determinants remain valid when incorporating spatial interdependence and the specification by country of origin, the neighboring-province FDI and GDP show significant impacts on host province FDI. The directions of such impacts are consistent with the FDI motivation of "agglomeration with regional trade platform" rather than "horizontal" as implicitly assumed in the previous works.
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