| This dissertation is about the location of FDI and its impact on trade balance on provincial basis. I chose 1994 to 1999 as the time window for my study mainly because of data consistency, stability and maturity of FDI flows.; The study intends to achieve two objectives: (1) To uncover the locational determinants of FDI inflows among China's provinces. The general location patterns are not expected to be stationary, but rather changing through time. These changes represent a dynamic process between foreign investors and host provinces. This study should be able to answer the question: what makes foreign investors prefer some provinces to others as possible location choices for their investments? (2) To identify the relationship between FDI inflows and trade (total trade, import, export and trade balance), especially how FFEs (Foreign Funded Enterprises) contribute to China's trade expansion.; GDP, Education, Transportation, Population, Per capita Income, Cost of Labor are identified as independent variables in the multiple regression models. It is found that, over, GDP, Population and Transportation are the three most influential determinants of FDI inflows. GDP and Transportation had positive impact on FDI while Population had a negative impact. FDI inflows are unevenly distributed among China's regions and provinces. The South and East regions have attracted majority of FDI inflows over the years. Guangdong, Jiangsu, Fujian and Shanghai are the clear leaders.; Evidence from exports and imports implies that FDI in China has in fact helped improve the regional trade balance over time. Out of the six regions, except for the North regions, all have an improving FFEs' trade balance over the six-year period, largely because of huge increases in exports.; Further studies on FDI inflows focusing on industries and sectors, source countries, major recipients, and extended time period will certainly help explain and predict FDI distribution across regions and provinces more comprehensively. |
