The Location Determinants Of China’s Investments Abroad

This thesis researches the effect of different location determinants on attracting FDI from China, and will contribute to existing literature by making an econometrical analysis based solely on the China-EU cooperation.The study is performed on a macro level, and is based on panel data from25different EU countries during the time period2004to2010. The estimation using fixed and random effect models shows that factors such as GDP, R&D, infrastructure, and labor cost have significant effects on FDI inflow for all countries within the EU. In addition, openness of the economy and labor market flexibility, have a significant effect among the EU-15countries, while market capitalization has no effect in either group.These findings show that Chinese FDI into the European Union is complex and is influenced by a vast range of location determinants. In addition, we find that the significant determinants are very similar between the two groups of countries, thus indicating that there are only small differences regarding the factors that influence FDI in the old and new member states.