FDI Location Determinants in Mainland China (1986-2008): Spatial Panel Perspective

There emerge many studies on the location determinants of FDI (Foreign Direct Investment) in China and other economies in literature. However, most of these studies focus on the determining factors selections but ignore the factors and the importance of them will be changing when FDI nature shifts in a country/region. Furthermore, usually, these researches also fail to incorporate distinctive characteristics of spatial data completely. A few give only static analyses although they consider the attributes of spatial data. So, this study, taking the case of China, attempts to incorporate the spatial characteristics of provincial variables by employing spatial panel data analysis, as well as to capture the dynamic changes of the important of FDI location determinants via dividing the whole period into 3 phases. Findings: (1) the spatial characteristics do matter the inward FDI for the provincial areas in China; (2) the importance of FDI location factors indeed evolve dynamically through periods; (3) other findings. These findings have practicable policy implications for China central government as well as the local authorities and MNCs.