Transaction Costs From The Perspective Of China's Foreign Direct Investment And Export Trade Of Choice

Foreign direct investment and export are two main models in enterprises'transnational activities. This paper inspects China enterprises'selection on transnational activities, makes positive analysis by gravity model on the basis of analyzing factors which influences transaction cost in foreign direct investment and export activities.In the positive analysis, the relative quantity difference between foreign direct investment and export trade of China enterprises is explained variables, quoting country-specific data of China's foreign direct investment and export from 2003 to 2007 to inspect different factors influencing transaction cost in China enterprises'selection on foreign direct investment and export activities, and then influencing China enterprises'selection on foreign direct investment and export trade on condition that take the combined effects of information technology and communication standard (ICT), host-country institutional factors (CPI), WTO factors and distances between China and contiguous countries which impact investment and trade as explanatory variables. The fact shows that transaction cost is an important factor which impacts China enterprises'foreign direct investment and export trade. And the way of transaction cost impacting foreign direct investment and export is different: (1) From the perspective of foreign direct investment, the space preference based on knowledge of language and culture, improving legal system, similarity of social customs and the popularization of computer and information technology is an important positive factor which promotes an enterprise of a country to choose the form of foreign direct investment instead of export. At the same time, enterprises with technology advantages will choose foreign direct investment in order to protect intangible assets such as patent technology and intellectual property; and enterprises without advantages also will choose foreign direct investment in order to break the full protection for intangible assets and acquire technology or exchange threat for strategic consideration. (2) From the perspective of export, the nearer two countries are, the more helpful to narrowing iceberg cost; economic integration, especially joining in WTO will help to break the trade barriers between countries, the more honest of host system, the more helpful to eliminate the intangible trade barriers caused by institutional factors, thus to promoting the development for the country's export trade.