The Impact Of Service Industry Cluster On FDI Location Selection In China

FDI(Foreign Direct Investment)plays an important role in Chinese economic development in the long run,promoting the transformation into market economy and the integration into global economic system.Since the global financial crisis in 2008,the amount of FDI has decreased sharply,and the government has cancelled some preferential policy,raising the entry threshold of foreign capital.With both external and internal disadvantages,the amount of FDI flowing into China still increases at a steady pace.From the perspective of industry agglomeration,the paper investigates the influence of service agglomeration on FDI location selection.Firstly,relevant researches about industry agglomeration and FDI location selection are reviewed.Secondly,the influencing mechanism of FDI location selection are combed,especially focus on the effect of industry cluster.Thirdly,with panel data from 2003 to 2014 of 30 provinces in China,the location quotient of service industry is calculated and the regression model is established to analyze the impact of overall service industry cluster on FDI location selection.Considering the differences within service industry,the analysis is divided into three kinds of service agglomeration(producer services,consumer services and public services).The conclusions are as follows:firstly,service industry cluster can significantly promote the FDI flows into China and the positive effect of manufacturing agglomeration remains to be remarkable.Secondly,producer services and public services contribute to most of promoting effect the while consumer services reveal little influence.