Analysis Of Provincial Differences Of Inward FDI

Since the reform and open policy, China's FDI inflows growth have experienced three peaks, which were closely related with the government's institutions and policies adjustment. At the same time, FDI inflows are quite unevenly distributed among China's geography regions:the eastern and coastal provinces absorb more FDI than the western provinces, which have more population and abundant natural resources. In this background, the impact of the institutions on FDI inflows has been a new focus of the government and academic world.Based on the literature review, first of all, the thesis separately analysed the impact of the formal institutions, informal institutions and market efficiency on FDI from the theoretical level. Second, combined the OIL paradigm with the institutional theory, the thesis researched the impact of the institutions on FDI in the path of ownership advantages, internal ization advantages and location advantages. Theoretical analysis showed that the institutions not only had a positive or negative impact on the ownership advantages, internalization advantages and location advantages of the host countries, but also could change the corporate behaviors of the home and host countries. So, the institutions had a impact on FDI inflows or outflows indeed.After the theoretical analysis, the empirical analysis followed. Based on the theoretical analysis, the empirical analysis included two aspects:on one hand, using principal component analysis, the thesis evaluated the institutional environment of China's every singal province(city), and then the thesis analysed the relevance between the institutional environment and FDI inflows with the use of Spearman coefficient method and the Granger causality test. The results showed that the institutional environments of attracting FDI were becoming better and better, and there was a significantly positive relationship between the institutional enviroments and FDI inflows. This showed that the region institutional factors had a significant impact on the region's FDI inflows, including government efficiency, the extent of the Government's thrift, the level of intellectual property protection and so on. On the other hand, this thesis further analysed the impact of institutional dimensions(regulative dimension, cognitive dimension and normative dimension) on FDI inflows through panel data analysis, as well as the impact of inter-provincial differences. The results showed that under the control of market demands and trade openness, three dimensions of the institutions had a signifiant impact on FDI inflows, and the inter-provincial differences were great; the regulative dimension had a greater impact on FDI inflows than cognitive dimension and normative dimension.On the above basis, this thesis finally revealed the main conclusions, and put forward some suggestions on attracting FDI inflows from three institutional dimensions to encourage FDI to play a greater role in the economic development.