Research On The Spatial Distribution Of FDI Under The Shock Of Financial Crisis

As the development of economic globalization, foreign direct investment has developed rapidly, making the interaction of economies in each country increasingly close. Through foreign direct investment, a country can share other countries’economic achievement. And though absorbing FDI, a country will receive enough external capital and technology to develop its economy. In short, FDI plays a huge role in promoting the economic development for both home country and host country.However, the distribution of FDI in a global or even in a regional range has presented significant differences. Global FDI has agglomerated highly in Europe, America and Asia. And the regional distributions of FDI in these three continents have unequal and agglomerating features. However, under the shock of1997Asian and financial crisis, Regional distribution differences of FDI among European and American countries are becoming small. Regional distribution differences of FDI among Asian countries are becoming large.Using spatial lag model, this paper study FDI spatial distribution in these three continents during the period of1995-2009respectively. And we give a preliminary estimation about dominated forms of FDI behavior in these three continents, According to empirical analysis; we find that space spillover effects dominate among inner countries of three continents. A country’s FDI inflows increase with the inflow of neighboring countries. FDI in Europe has the motivation of segment its industry chain vertically; however FDI prefers to invest developed countries in this region. Dominated forms of FDI behavior in America and Asia are both vertical specialization with limited agglomeration.This paper further examines the changes of spatial distribution of FDI in Europe、America and Asia under the shock of1997-1998Asian financial crisis. Time interval regression analysis indicates that under the shock of Asian financial crisis, space spillover effects among European countries becomes weak. Though inflows of FDI among each country are complementary, location of FDI has transferred from developed countries to underdeveloped countries. Relationships between FDI inflows of American counties are changed from complementary to Alternative. Dominated form of FDI behavior in is changed from vertical specialization with limited agglomeration to export platform. Space spillover effects among Asian countries become insignificant after financial crisis. It means that linkages in China mainland and its neighboring Asian countries and regions FDI inflows are changed from complementary to irrelevant. Dominated form of FDI behavior becomes export platform (without vertical motive).According to the empirical results, combined with other factors influencing spatial distribution of FDI, this paper finally puts forward policies and suggestions that facilitating China absorbing more FDI.Compared with the existing research, this paper may have three aspects of innovation:firstly, this paper studies FDI location under the background of financial crisis, which is different from existing research. The main objective of this paper is to study changes in Location of FDI under the shock of financial crisis and observe the characteristics and laws. Secondly, we consider greater geographic area of FDI distribution. This paper studies Location of FDI in European countries. American countries and Asian countries to examine spatial linkages among different countries in these three continents. Thirdly, we apply spatial econometrical model to the study. This model has been used by scholars to FDI location research in recent years. On the one hand, we study linkages in FDI from spatial geography angel. On the other hand, we can give a preliminary estimation about FDI strategies in different regions.