Comprehensive Evaluation Of China’s Provincial Business Environment And Its Impact On Foreign Direct Investment In The Service Industry

In recent years,China has been expanding the scale of attracting FDI.Under the background of economic servitization,the service industry has gradually replaced the manufacturing industry and become the main field in attracting FDI.However,while the scale of FDI in China’s service industry is expanding,the distribution of FDI in the service industry(SFDI)is uneven,and there is still much room for improvement in some provinces.Business environment is an important basis for investors to make OFDI,and as an institution-sensitive industry,the development and the introduction of SFDI are more vulnerable to the impact of the business environment.Therefore,scientifically and reasonably evaluating the business environment at the provincial level and exploring its impact on SFDI is of great significance for China to improve the business environment and further expand the scale of SFDI.Firstly,this paper constructs the evaluation index system of business environment in provincial areas,which includes seven first-level indexes: macro economy,infrastructure environment,social service environment,government affairs environment,legal environment,supportive environment and ecological environment.Then the index weight was determined by entropy weight method,and the comprehensive score and ranking were obtained by TOPSIS method,then,on the basis of the comprehensive evaluation results,the business environment and its subenvironments of each province are compared and analyzed.Secondly,using an extended investment gravity model to explore the impact of business environment and its sub-environments on SFDI.Finally,with per capita GDP as the threshold variable,the panel threshold model is constructed to explore the heterogeneous effects of business environment and its sub-environments on SFDI.Through the above research,the following main conclusions are drawn:First,in terms of business environment,there is a big gap in various provinces.The overall business environment and sub-environments of areas with higher economic development levels are better than those of areas with lower economic development levels.Beijing,Shanghai and Tianjin,with high levels of economic development,ranked the top three.The bottom three provinces are Xinjiang,Guangxi and Yunnan,all of which have lower levels of economic development.From the perspective of temporal changes,the business environment of the 30 provinces both showed an upward trend from 2015 to 2020,and almost all of them achieved an increase of more than 20%.Second,in terms of the empirical study on the impact of business environment on SFDI: the business environment is the decisive factor to promote SFDI,that is,for every1% improvement in the business environment,SFDI will increase by 5.910%.Macro economy,infrastructure environment,social service environment,legal environment and ecological environment all have significant positive effects on SFDI,and the social service environment has the greatest impact.Third,in terms of the empirical study on the heterogeneous impact of business environment on SFDI: provincial business environment and its sub-environments all have a single threshold effect on SFDI.For provinces whose per capita GDP is higher or lower than the threshold,business environment has a positive impact in promoting SFDI,and the degree of influence will increase with the level of economic development enhanced.Finally,based on the research conclusions,this paper put forward corresponding policy recommendations,and prospects the future research.