Foreign Direct Investment In Guangdong Locational Factors Research

FDI and multinational company play key role during economic globalization,moreover, FDI is replacing international trade in current international economiccooperation. Plenty of FDI has been invested in Guangdong province since reformingand opening policy was adopted in the late 1970s, as a result of this Guangdongbecomes the earliest province which attracts foreign investment. But due to the orderof reforming and opening and other environment elements, region differences of FDIin Guangdong province are very apparent: the region of Zhujiang Delta had attracted$709179 million from 1991 to 1999 which occupied 72.19% of FDI total inGuangdong; the non-region of Zhujiang Delta had only attracted $204169 millionwhich occupied less than 21% of FDI total. At the same time, economy in everyprovince is developing very fast and the focus of foreign investment is shifting fromZhujiang Delta to Changjiang Delta, so Guangdong is under a lot of pressure.The article analyzes and explains the causes of region imbalance of FDI inGuangdong. From the point of nature, what foreign businessmen care about is theinvestment environment of the region, including infrastructure, market situation, cost,scale economy and other elements. The test method of facts and proofs can offertheoretical basis, so on the basis of nature analysis the article further explainsinfluence degree that environment elements pose to FDI. Location factors that thearticle chooses include GDP, export figures, region gross product, percentage oftertiary industry in GDP, quantity of scale companies, investment total ofinfrastructure, the pay of work force and location cost.Considering the changing environment elements, the article samples five-yearfigures from 2000 to 2004 for analysis in order to increase reliability of facts.Infrastructure index reflecting gathering effect poses positive influence on regionadvantages from 2000 to 2004, while gathering effect of quantity of industrialcorporations has positive influence in 2000 2001 and 2004, but has negative influenceon FDI in 2002 and 2003, so gathering effect of quantity of industrial corporationsneeds to be studied further. The cost of work force boosts the region advantages greatly from 2000 to 2004, foreign businessmen always choose the regions oflow-cost work force to invest, which is totally opposite to Mr. Chen' research.. Duringthe past five years, location cost has had negative effect to FDI, and FDI tends tochoose low-cost locations, which is consistent with FDI region distribution inGuangdong. Three market factors have positive relation to FDI. Market scale andeconomic development have apparent positive relation to FDI. There is lasting mutualpromotion between FDI and export figures (a key economic index), because anopening market is always an important factors attracting FDI.To improve Guangdong' attracting FDI capability and guide FDI reasonably,according to the study of this article, the most important is to polish Guangdong'sinvestment environment and establish attracting region advantages. The last part ofthe article offers some policy suggestion for Guangdong to further attract FDI.