Fdi Location Choice Influence Factor Analysis

Since the reform and opening up, China has become one of the most foreign investment attracted countries in the world by the advantage of cheap labors, land resources and the efforts of all levels of governments. The inflows of FDI to China not only provide capital, advanced technology, organization, management skills, as well as other intangible assets. Practice has proved that FDI inflows greatly boosted local industry competition, innovation, savings and capital formation, while the promotion of foreign trade, economic growth and employment. However, due to the echelon of China’s reform and opening up, and other policies, environmental factors, FDI in China showed significant regional imbalance. This imbalance includes not only the gap between the well-known of the three regions, but also the inner gap of eastern coastal areas.In this paper, some Panel Data of various cities in the three regions, that is the Yangtze River Delta, the Pearl River Delta and the Bohai Rim form2002to2011has been used, and choosing indicators including average wage, GDP, the cumulative foreign direct investment and other factors. Then the author examined these data using the multivariate econometric models and analyses what effect and the degree of influence has these indicators on the three regions.The study found that:the main effect directors of the three regions are market size, market potential, labor costs and agglomeration effect, but the impact of each factor has a big gap and has a relatively smaller effect for the Pearl River Delta and the Bohai Sea. The indictors of the openness degree of market and level of education have the same effect for the three regions, but there is also some small discrepancies of the regression symbol and the expectation symbol of some factors in the three regions. The factors of the infrastructure and services do not have significant effects of the FDI attraction.Based on the research, the author has given some suggestions of how the three regions attracting further more foreign investment and reducing the regional economic gap. The suggestions include positive development of human resources, to create the diffusion effect of the centre city, forming the agglomeration economies effect selecting the appropriate industries and so on.