Empirical Analysis On Location Selection Influence Factor Of Foreign Direct Investment In China

Since the reform and open policy, the scale of foreign investment has been increasing, with rapid development of Chinese economy and improvement on economic environent. Foreign investment promotes the Chinese economy developing, but brings some negative effects. The regional distribution of foreign investment is imbalanced, which enlargeing the disparity between eastern areas and mid-west areas, and bringing some unstable factors that influence development of Chinese economy in a healthy way. So this article will research the terms of region selection about foreign direct investment to make some suggestions on absorping foreign direct investment for mid-west areas and change the present situation of foreign direct investment's regional distribution.This article analyzes the development survey of foreign direct investment in China in recent years, including whose increase of investment amount, industry distribution and regional distribution between eastern areas and mid-west areas, and constructs the indicator system including ten factors according to the theory and practice analysis. It judges synthetically of economic enviroment in different regions by the method of factorial analysis to prove it scientific and reasonable. According to the results of judgement, we think that the score from synthetical judgement will determine amount of foreign direct investment, and the factorial indicator system is scientific and reasonable.This article analyzes empirically the terms of foreign direct investment's regional selection from 1999 to 2008 by the methods of stepwise regression with panal data. Although there are different reasons in methods, but the conclusions basically is coherent. The primary factors influencing the terms of foreign direct investment's regional selection are preliminary FDI and scale industrial production amout, which represent that the factor of industry conglomeration is the most one in aborping foreign direct investment. If the degree of industry conglomeration is higher in a region , foreign direct investment will be put in there. Vice versa.Other two remarkable factors influencing foreign direct investment is dependence degree of foreign trade representing the market opening degree and electric power consumption representing infrastructure, which are negative correlation with regional foreign direct investment. Namely, the higher dependence degree of foreign trade or electric power consumption is in a region, the lower foreign direct investment is. Vice versa. According to the result of empirical analysis, this article will make some suggestions for absorping foreign direct investment from four aspects that are industry conglomeration, scale of market and regional consumption level, cost of labor and infrastructure facilities.