Analysis Of The Impact Of Commercial Cost On The Regional Distribution Of FDI Within Jiangsu Province

Capital flows plays an important role in the global allocation of resources, moreover sustainable and stable capital flows is a powerful guarantee for sustainable economic growth. As one of the regions in China with most rapid economic development, Jiangsu Province has made great achievements in attracting FDI, while adversely the non-equilibrium distribution of FDI in this area also discourage its sustained economic development. After long-term study on FDI by experts and scholars from home and abroad, it is found that commercial costs have turned out to be an important factor which have an impact on the regional distribution of foreign capital in China. Moreover in recent years, studies on commercial costs have become a hot topic around the world. Therefore, it is worth to studying and discussing that what the specific concept of commercial costs is, what the current status of commercial costs in each city in Jiangsu Province are and how the commercial costs affect the distribution of FDI within Jiangsu province.Based on the theories of commercial costs and location distribution of FDI studied by scholars at home and abroad, this thesis firstly defined commercial costs as the sum of tangible fees and intangible costs arising from start-up and operating period by enterprises of any nature by standard analysis, and divided commercial into tangible costs and intangible costs. Tangible costs include land costs, labor costs, operating costs and tax burdens, while intangible costs include preferential policies index, government administrative efficiency and infrastructure status.Then this thesis uses comparative analysis to analyze the distribution of foreign investment in Jiangsu Province as well as the status of commercial costs. It is found that Suzhou, Nanjing, Wuxi and other cities with adequate FDI have advantages in intangible costs, while adversly Suqian and Huai'an which is poor at FDI have advantages in tangible costs.This thesis also scores and ranks the commercial costs for cities of Jiangsu province, and the results showed that commercial costs are lower in Suzhou, Wuxi and Nanjing than the cities of Suqian and Huai'an. Otherwise, through correlation analysis, taking the 13 prefecture-level cities in Jiangsu Province as research objects, this thesis collects data, establishes model to analyze the relationship between the various indicators of commercial costs and the distribution of FDI and draw out some conclusions. Results have shown that positive relationship exists between land costs and FDI, while negative relationship exists between other indicators and FDI except labor costs which have an uncertain relationship with FDI. Moreover, market capacity has a significant positive impact on FDI. In the end, on the basis of a full-text summary and the empirical results, this thesis proposes that various activities should be taken to control commercial costs, and different cities should attract FDI coordinated with their own commercial costs structure. Finally, we should create an efficient market environment and investment climate for FDI.