Research On The Determinants Of FDI In China's Service Industry

Since 1980s, service industry has became the main trend of FDI with adjustment of industrial structure and rapid development of service industry liberalization all over the world. However, in China, the manufacturing industry denominates the foreign direct investment and few FDI were inflow in the service sector; the amount of inward FDI that was invested in the service sector was much lower than not only the developed countries but also the average level of world. As the opening of China's service industry up nowadays, it is important to study the factors that influence FDI utilization in service industry so as to attract more and better investment and improve the economic effect. The thesis starts from the relevant theories on FDI in service industry, then based on analysis of status quo of FDI utilization in service industry, qualitative and empirical analysis were carried out to study the determinants of FDI in China's service industry. At last, the thesis puts forward some advice on FDI utilization in China's service industry.The thesis consists of five chapters. The first chapter is the theoretical review of FDI in service industry and a literature summary about determinants of FDI in service industry. The second chapter analyzes status quo of FDI utilization in service industry, and compares them in order to find some differences. Chapter three constructs the analytic framework of FDI in service industry on the basis of location factors, and then illustrates attractive and restrictive factors of FDI utilization in China's service industry. In the fourth chapter, principle component analysis and ridge regression analysis are used for further analysis of determinants of FDI utilization. The empirical results indicate that economic openness degree in service industry, inward FDI in manufacturing and the level of urbanization are positive correlated with FDI utilization in China's service industry ; there is negative correlation between labor cost of service industry and FDI utilization in China's service industry; however, GDP per capita, average disposal income of urban residents, human capital, infrastructural construction, the imports and exports in service trade are no significant correlated with FDI utilization in service industry. Chapter five gives some countermeasures on how to attract investment for the service industry based on the results from above qualitative analysis and empirical analysis; meanwhile, it points out some aspects that need to be further studied.