A Comparative Study Of The Location Advantages Of Shandong And Guangdong In Attracting Foreign Investment

Since the last century,foreign direct investment,as an important form of international capital flow,has made great progress in the world.While promoting the economic development of capital-sourced countries,it has gradually become a booster for the economic and social development of host countries.In China,the use of foreign capital is a major basic national policy formulated by the Party Central Committee based on China's national conditions and economic development.After more than 40 years of opening up to the outside world,China has become the second largest capital-inflow country in the world,and has made remarkable achievements in the use of foreign capital.Similarly,the economic development of a province is also closely contacted to the foreign capital it introduces.And what closely related to foreign capital is the location advantage of a province.The quality of location advantages seriously affect the quantity and quality of foreign investment.Shandong and Guangdong,as China's major investment-attracting provinces,have unique location advantages in terms of policy factors,market factors and infrastructure factors.Studying and comparing the location advantages of these two provinces can not only clearly define the important factors in attracting foreign investment,but also the relative shortages of investment in Shandong provinces,and targeted propose policy recommendations.This paper firstly describes and compares the history and current situation of foreign investment in Shandong and Guangdong,and draws the following conclusions:(1)There is still room for improvement in the actual use of foreign capital in Shandong,and the development tendency is good;And for Guangdong,its focus on investment will turn from quantity to quality;(2)The distribution of investments in the two provinces have some serious regional distribution problems;(3)Both provinces have rich sources of foreign capital,but Shandong has more sources of large amount foreign capital.While Guangdong has a strong dependence on Hong Kong in attracting capital;(4)The actual use of foreign capital of Shandong mainly flows to vocations of the secondary industry,while for Guangdong it mainly flows to vocations of the tertiary industry;(5)The most important method of investments to the provinces is foreign-owned,joint ventures and foreign investment shareholding system will also have more developing room in the future.In the study and comparison of the location advantages of Shandong and Guangdong,the combination of qualitative and quantitative analysis is adopted.Because the location advantage covers many aspects,we divide the influential location advantage into six categories: policy advantage,cost advantage,market advantage,science and technology advantage,agglomeration and infrastructure advantage.In terms of these aspects,the location advantages of the two provinces are introduced separately.In the quantitative analysis,the measurement model is established.From each location advantage,1-2 indicators are selected,and the stepwise regression method is used to screen forward and backward respectively the significant variables of introduction of foreign capital in the two provinces.Through the measurement model,the paper draws conclusions.The indicators that play an important role in the introduction of foreign investment in Shandong include the fixed assets investment,the total length of the transportation line,and the approval amount of three patent applications,it shows that compared with Guangdong,Shandong has the location advantages in infrastructure and cost;the indicators that play an important role in the introduction of foreign investment in Guangdong include the total GDP,the number of graduates from ordinary universities,the amount of fixed assets investment,and the number of industrial enterprises above designated size,this indicates that compared with Shandong,Guangdong has the advantages of market,agglomeration and infrastructure;In terms of technology and culture,there is little difference between the two provinces,we think Shandong has some advantages.Starting from the results of the measurement model,comprehensive analysis of the significant indicators and coefficients of the respective variables,we draw the following conclusions:Shandong has two geographical advantages: cost and infrastructure;while Guangdong has three geographical advantages: policy,market and agglomeration;and in terms of science,technology and culture,we believe that Shandong has a weak relative advantage.At the end of the paper,by comparing the location advantages of the two provinces,we put forward policy suggestions for Shandong Province in all aspects,and give specific measures on how to strengthen the location advantages in Shandong province.