Study Factors Of Foreign Direct Investment In The Region Of Choice

With economic globalization, China’s foreign direct investment is developingrapidly, though it started late. Because of this background, this paper focused on thisarea has some practical significance.In summary, the research content of this paper is to collect and collate the latestdata and information, the use of gravitational physics model to study regional foreigndirect investment determinants. This paper use two main methods: qualitative andquantitative analysis.In qualitative analysis, I mainly study the current size, regional distribution ofChina’s foreign direct investment. By collecting and comparing data，I found twoquestions about the location selection of China’s foreign direct investment: regionaldistribution of investment is too concentrated and too small proportion of the developedworld.In empirical research, the paper builds a gravity model to study the area of foreigndirect investment selection problem, its explanatory variables are as follows: our GDP,GDP of the host country and the distance between the two host countries, the hostcountry’s annual GDP growth rate, the host country’s real effective exchange rate, thetrade volume between China and the host country. The regression results are: China’sforeign direct investment has significant positive correlation with China’s GDP and tradeTR.The paper conclude is: the development of China’s GDP plays a key factor; oureconomic partnership is an important element when choosing the area of foreign directinvestment; our companies pay not enough attention to technical and markets factors.Based on the above conclusion, this paper presents a series of policyrecommendations, such as: enhancing the country’s economic strength and create a goodexternal environment for investment and so on.