The Impacts Of "Hub-Spoke" Structure On FDI Distribution

This article focuses on the impacts of "Hub-Spoke" structure in the overlapping regional economic integration on FDI distribution in the region. Traditional definition on the "Hub-Spoke" structure is based on the amounts of the countries’ RTAs, which had ignored the effects of the countries’ distance and market size. Based on the theory analysis, this article starts with the FDI between the OECD countries and the gravity model to get the parameter of countries’distance effects on FDI. Then the Regional Market Size(EGDP, ETGDP) and "Hub-Spoke" Index (HS) are designed. The higher HS, the more obvious hub position for a country. Then we take180countries’ from1980to2009data as empirical study to show the impacts of HS and EGDP on FDI distribution. The results show that the HS can effectively reflect the impact of the "Hub-Spoke" structure on FDI distribution, which is greater than the impact of Regional Market Size on FDI, indicating the importance of relative position of a country in the overlapping economic integration. Countries should take the right approach to get into the process of regional economic integration, thus to get a higher HS to improve the attractiveness of FDI.