China Crowding Out Effect On Other Countries' Fdi Empirical Analysis

Foreign direct investment (FDI), which consists of capital, knowledge and technology, not only bring to the host country the capital, also the advanced technology, equipment, management, and market experiences. And the FDI related product overflow is a promotion for the host country to increase its product income, improve domestic technology and develop the productivity. Thus, the world, especially those developing countries, is competing for FDI furiously.As China's ability of attracting FDI increased, much of the attention from the whole world, especially the developing countries, has focused on weather China's FDI coming at the expense of other countries. There are complaints that China is crowding out the FDI of other countries. On the base of the literature review, this essay adapted the gravity model to prove that this FDI crowding out effect doesn't exist in most country, especially in the developing countries. The exception lies in the OECD countries which we also state its reasonability. Moreover, we gave the robustness checks about the result, and make a further study about Japan, which we regard as the main country that affects the result. Finally, we gave an institutional study about the result.