The Comparison On Locational Determinants Of FDI Inflow In Guangdong And Jiangsu

Since the beginning of reform, most of FDI has flew into the eastern region. Sincel993, FDI in Guangdong and Jiangsu has been in the first and second place in china. In recent years, the speed of attracting FDI in Guangdong became slow while the speed of attracting FDI in Jiangsu was very fast .Since 2003, Jiangsu has become the largest recipient of FDI inflow in china instead of Guangdong, so it is very important to study the location advantages and location determinants in two provinces.Firstly, the paper chooses the representative location determinants to compare the investment environment of FDI in Guangdong and Jiangsu. The results show that there are advantages on openness, the level of marketization and agglomeration economy in Guangdong while there are advantages on human resources, average wage and the growth rate of GDP per capita in Jiangsu.No remarkable differences could be found in GDP per capita, infrastructure and the level of urbanization between two provinces and the trend represents that Guangdong had advantages on these items at first and then Jiangsu overtook Guangdong.Among these representative location determinant factors, which factors have influential effect on the flow of FDI in Guangdong and Jiangsu respectively? The paper analyzes the location determinant factors in two provinces by establishing the multi-linear regression with the data for the period of 1992-2004 .There is clear evidence that economic size, labor cost, agglomeration economy, openness and the level of marketization have played important roles to affect the location of FDI in Guangdong while economic size and growth potential, agglomeration economy and the human resources with lower cost have played important roles to affect the location of FDI in Jiangsu .Based on the above analysis, the paper comes to conclusion and put forward the political proposals.