Analysis Of Environmental Factors On FDI Transferring From Pearl River Delta To Yangtze River Delta

Since the policy of reforming and opening up to outside was carried out, Pearl River Delta and Yangtze River Delta have attracted most of foreign direct investment (FDI) in China. At the beginning, FDI mainly focused on Pearl River Delta. But after 1992, it began to diffuse to Yangtze River Delta. Especially in last few years, FDI Pearl River Delta attracted was experiencing an obvious decrease. So, to find out the real reasons why FDI transferred from Pearl River Delta to Yangtze River Delta in recent years is the main aim of this research.Firstly, based on the thorough analysis about investment climate theory, eight environmental factors that might affect foreign investment are selected. They are macro-economy condition, the opening-up extent, the size of market, the labour cost, the science strength, the human resource, the development of tertiary industry and the financing capability. Secondly, a statistic model is built to distinguish the common factors that will affect FDI's flowing into Pearl River Delta and Yangtze River Delta. According to the result of that positive analysis, some factors such as the size of market, the labour cost, the science strength and the human resource etc are compared between those two regions. Finally, the reasons that resulted in the shifting of FDI are generalized, and some suggestion on improving the investment climate of Pearl River Delta and that of Yangtze River Delta is put forward. The question about how to keep FDI stay one place persistently is discussed.In the positive analysis sector, the panel data including the concerned data of some typical cities of those two regions is used to estimate the coefficients of the model. As the complement to the positive analysis, the management ability of government, the harmonization of one region and the service quality of the service sector are compared between Pearl River Delta and Yangtze River Delta.As for the problem of attracting FDI persistently, the good solution is to attach importance to improve those factors which are amendable and durable. The conclusion and the suggestion here offer a reference for all levels governments to build the investment policies.