FDI'S Location Determining Factors Research On The Stage

Since the reform and open door policy adopted, FDI in China has increased in a fairly high speed. So far, China has became one of the most active countries in absorbing the foreign direct investment (FDI). However, FDI in China shows the obvious regional imbalance for gradual implementation of the China's reform and open door policy and other environmental factors. With the changes of regional opening policy and the universal implementation of the preference in foreign investment, the role of the preferences in absorbing foreign direct investment is weaken. The foreign investment shows to flow to the regions where have well-established infrastructure, sound market operating mechanism and large stock of foreign investment. In order to explain the above phenomena, it's important and actual to study the factors which influence the distribution of FDI in east, middle and west areas. Based on the above realization and regional advantages theory of Dunning, the paper analyses the reasons that imbalance of FDI from two aspects, qualitative analysis and quantitative analysis.For the qualitative analysis, we need to consider the subjective factors such as market factors, labor factors, system factors, gathering factors and environmental factors. In addition, based on the regional advantages theory of Dunning, we propose four assumptions of stage determining factors of FDI of developing countries .On the base of the qualitative analysis, the paper use Panel Data of every province of three stages between year 1986 to year 2006, choose influencing factors including WAGE,GDP,POL,FE and others. We use multiple econometric model to test impact of these factors on absorbing FDI of east, middle and west areas and estimate quantitative relations between them.Finally, under this theoretical and empirical analysis of the study results, we , have reached a conclusion that the eastern part has passed into the phase of recession, the middle part has passed into the phase of transition period between experimental stage and leap stage and the western part has passed into the phase of leap stage in attracting investment. What is more, we put forward suggestions of how to improve regional investment environment of China and how to form a balanced regional economic structure, focusing on the strategy of middle and western areas' attracting investment.