An Empirical Study On The Fdi In Shanghai Using Panel Data

With the development of Chinese economy, a lot of variables which investors should consider have appeared. As dealing all the differences in China is one important factor to take seriously making FDI decisions into consideration, this research represented the motivations of foreign direct investments in Shanghai of China for the global firms. It is true that there are a number of forms and ways to invest into China and there must have difficulties to take into consideration as specific values or variables.As China, especially such as main big cities including Shanghai has been developing more than before, FDI figures in Shanghai represent the importance which is not only about Chinese statement but also the one of the most developing areas. Not considering the interaction that FDI has what kind of characteristics and purpose, the6types are represented such as GDP in every fiscal year, the level of human resources, the level of reformation in a specific area, the level of wage which is normally applicable to the public, resources which firms should use, and the government policy against FDI and firms. Compared to the two main cities, Beijing and Shanghai, it can be easily seen that those variables have considerably relied on the decision factors of FDI.In this study, using the panel data with6variables such as GDP, HR, REFORM as the market oriented variables and WAGE, MATERIAL, POLICY as the production&efficiency oriented variables during from2004to2008, the paper examined that the determinants of FDI in Shanghai are based on the two types of accessing hypothesis.The empirical results indicate that the market oriented type hypothesis had more influences than the production&efficiency oriented type hypothesis on the global FDI in Shanghai whereas most researches usually indicated that production&efficiency oriented type has more effects because of cheaper price production and then import to other countries. It is definitely true that firms should consider the importance of the market size and purchasing power to maximize the benefits.