A Study On The Business Environment And Its Impact On Foreign Direct Investment

Since the Economic Reform and opening up,China's Inward Foreign Direct Investment(IFDI)has maintained a steady growth.According to the 2019 world investment report released by the United Nations conference on trade and development,China is the world's second largest recipient of foreign investment.Still,China's use of foreign direct investment has also come under pressure since the 2008 financial crisis,as a result of the global downward trend in FDI.That means China's strategy to attract foreign investment needs to change.In order to better promote the development of the private economy in the world,the world bank set up the project team Doing Business in 2001,and gradually established a set of evaluation system on the development environment of the private sector in the world--the Business environment index evaluation system.The system aims to conduct a quantitative assessment of the operating environment of enterprises in various countries,so as to improve relevant laws and regulations,improve the efficiency of national supervision and promote the development of private economy.Since the 18 th national congress of the communist party of China(CPC),China has gradually established a new strategy of attracting investment by optimizing the business environment.Theoretically,the business environment is closely related to FDI,and a good business environment is more attractive to foreign investment.Then,under the current new economic situation,can China's improving business environment successfully be the internal driving force for the sustained growth of China's foreign direct investment? If the above relationship holds,does the role of business environment in promoting FDI vary among countries at different stages of development? Further,is there heterogeneity in the pull effect of various sub-indicators of the business environment on FDI inflows? How does the business environment affect net FDI inflows? Based on the above problems,this paper selected 123 countries or regions from 2009 to 2018 as samples,used cross-sectional weighted GLS method to test the influence of business environment of each economy on IFDI and its heterogeneity,and separately investigated the difference in the effect of sub-indexes of each link of the business environment on IFDI,and tested the mechanism of influence of business environment on FDI.The results show that: in the whole sample,the frontier distance score of a country's business environment can significantly promote thenet FDI inflow of the country.When differentiating further the heterogeneous effects of subcategories of business environment indicators,the impact of property registration,contract execution and bankruptcy handling on IFDI was significantly positive,while the impact of other indicators was not significant.The results of grouping the economies by degree of development showed that the impact of doing business on IFDI was significantly positive only in developing economies and not in developed economies.In addition,the improved business environment has an impact on IFDI through the indirect mechanism of risk reduction.For Chinese cities,the improvement of business environment also plays a significant role in promoting FDI.Among the sub-indexes of urban business environment,soft environment and business cost play a significant role in FDI.After differentiating the degree of urban development,it is found that for cities with higher income,the social service index also plays a significant role.For cities with lower incomes,more emphasis is placed on the infrastructure environmental index...