Location Behavior Of China's FDI Enterprises Under The Dual Constraints Of Factor Costs And Environmental Regulation

At the beginning of reform and opening up,with its low factor cost and rich natural resources,China has quickly become a hot place to attract foreign direct investment(FDI)with the strategy of “bringing in” to the outside world.Although FDI has promoted the rapid economic development of various parts of our country,it has also brought great pressure on environmental protection.It has become a realistic problem that local governments must attach great importance to attracting foreign-funded enterprises not at the expense of the environment.Previous studies have shown that factor cost is the main factor affecting the location choice of foreign-funded enterprises.With the continuous strengthening of environmental protection in China,environmental regulation,as a special form of cost factor,has attracted great attention of foreign-funded enterprises.Therefore,it is particularly necessary to explore the behavior of FDI enterprise location in China under the dual constraints of factor cost and environmental regulation.Under the guidance of the theory of new economic geography,this paper expounds and analyzes the influence mechanism of factor cost and environmental regulation on FDI enterprise location behavior,and discusses the influence mode of factor cost and environmental regulation on FDI enterprise location behavior under the condition of spatial heterogeneity in the level of economic development.By analyzing the spatial distribution of factor cost,environmental regulation and FDI,this paper finds that the spatial distribution heterogeneity of “high in the east and low in the west” exists in factor cost,environmental regulation and FDI.Then,with the help of the panel data set of 266 prefecture-level cities in China from 2005 to 2017,this paper uses the panel data model to verify the influence of factor cost and environmental regulation on the location behavior of FDI enterprises.The results of empirical analysis show that:(1)from the overall sample,the influence of factor cost and environmental regulation on the location behavior of FDI enterprises has an inverted “U” non-linear characteristic;(2)from the perspective of sub-sample,factor cost and environmentalregulation promote FDI in economically developed areas,and they restrain FDI in underdeveloped areas,but they have no obvious impact on FDI in middle economic development areas,so the nonlinear characteristics of FDI enterprise location behavior are affected by the spatial heterogeneity of economic development level.(3)from the perspective of threshold effect,there are two threshold values for the influence of economic development level on the location behavior of FDI enterprises.If the level of economic development is lower than the first threshold,both the increase of factor cost and the enhancement of environmental regulation have an inhibitory effect on FDI;if the level of economic development is between the first threshold and the second threshold,both the increase of factor cost and the enhancement of environmental regulation have an inhibitory effect on FDI,but the effect has been relatively weakened.If the level of economic development is higher than the second threshold,the increase in factor costs and the enhancement of environmental regulation will significantly promote FDI.Based on the above research conclusions,this paper believes that various regions in China should formulate differentiated factor costs and environmental regulation measures according to the level of economic development to attract FDI.