The Empirical Study Of The Regional Determinants Of FDI In The Central Region Of China

Boosting the development of the central region was put forward by PremierWen Jiabao in the government work report for the first time in March2004.“The plan to boost the central region development” had been approved byState Council in October2009, the central region includes Anhui, Henan,Hunan, Hubei, Jiangxi and Shanxi. Based on the background of boosting thecentral region development, according to New Economic Geography(NEG)and relevant theories, consulting relevant references at home and abroad,seven regional determinants of FDI are empirically explored in this paper byusing spatial dynamic panel data model and panel data of6provinces in thecentral region from1994to2009, including GDP, degree of openning-up,labor cost, human resource level, infrastructure, industrial structure anddegree of agglomeration of FDI, and FDI Spatial spillovers is also tested.The empirical results reveal that, FDI could be significantly promoted byincreasing infrastructure and industrial structure, and FDI Spatial spillovers isexisted observably in the central region. The results also turn out that,compared with common panel data model, spatial dynamic panel data modelcan be used to show the real condition of the central region’s FDI locationdistribution better. Based on the conclusions, this paper argues that, by takingadvantage of the opportunity of boosting the development of the central region,integrated transportation system should be built in the central region.Industrial structure and the industry layout should be optimized as well. Thesemeasures above could help the central region to form the long-termmechanism of regional harmonious development and the central region’s FDIlocation distribution of the core-periphery type, in order to increase thenumber of FDI, and pay attention to improve the quality of FDIsimultaneously.