A Study On FDI Location Choice And It's Effect On Regional Economy

After more than twenty years development in China ,foreign capital economy have got a rapid expand while it's district distribution is highly uneven :more than 85% of foreign capital concentrate in East region while quite a few of it enter into Middle and West region.. At the same time, the economic growths in East region greatly exceed another two regions.In order to analysis the deep reason of this phenomena, we review development course and distribution of FDI in China .And explain it's location selection from four factor: policy,market,cost,congregation,investment soft environment in theory, Using six factor: last FDI,wage,market degree,market potential,district open degree and infrastructure to demonstrate their influence to the location selection of FDI. The results show that except wage, the other five factors have positive influence. Then introduce Douglas produce function, adopt OLS method to regress region FDI and GDP to analyze FDI's effect to regional economy. Results show FDI promotes GDP in West region while it doesn't apply to other two regions.Finally, we give policy suggestion about how to attract FDI, reduce the gap of economy in the three regions, and harmonize region economical growth. it include :push investment liberty ,treat foreign corporation friendly; develop human resource; build center city which have diffuse effect; according to local advantage, choice suitable industry to form congregation effect.