An Empirical Study On FDI Location Selection Factors In Eastern China

Since the beginning of china's opening-up to the other countries, the eastern region of China attracts the most part of the foreign direct investment. The proportion of the actual FDI in the eastern region is more than 85 percentage of the total share of our country. This is mainly due to the excellent location conditions and many policies that attract more FDI.Firstly, this paper generalizes the famous FDI location selection theory. On the basis of the analysis on the conditions of foreign direct investment in the eastern region of china, we take an empirical analysis of the FDI location selection factors in the eastern region, which include market factors, cost factors, the aggregation factor, domestic investment and the education level. The panel data which is employed in this paper came from the 11 jurisdictions in eastern China, and the period is from the year of 1990 to 2008.With respect to the selected data, the writer make the ADF test and the Cointegration test. Based on the result of the hausman test, we chose the random effect model as the most effective model. The main conclusions are as follows: the main factors which make great contribution to attract foreign direct investment include the aggregation effect, local market size, regional education level and the land cost. With respect to the factor of domestic physical investment, we found there is a crowding-out effect on foreign direct investment in eastern China. The high-quality worker is more important in order to attract FDI. However, the infrastructure conditions and the degree of openness are less significant in attracting more FDI flow into the eastern area.Finally, this paper give some suggestions on how to make the more effective FDI attracting policies, which are as follows, Optimizing the concentration of industries, speeding up technological innovation, Optimizing the introduction structure of foreign capital's industries and countries, Speeding up the transfer of eastern China's capital and strengthening the pace of the soft environment construction .