The Location Determinants Of China&United States Investments Abroad:Evidence From The EU

This thesis researches the effect of different location determinants on FDI from China and the United States towards25EU countries, and will contribute to existing literature by making an econometrical analysis based on the China-EU cooperation and a U.S.-EU cooperation.The main purpose of this study was to see if China, which is in a fairly new and interesting position regarding outward direct investments (OFDI) and the U.S., which is considered one of the most experienced countries regarding OFDI, are considering the same location determinants equally important, or if there is any difference.The study is performed on a macro level, and is based on panel data from25different EU countries during the time period2004to2010. It is conducted through a mix of fixed and random effect regression models.The study finds that for China factors such as GDP, R&D, infrastructure, labour cost and openness have significant effects on FDI inflow for countries within the EU, while market capitalization and level of rigidness (labour-market flexibility) has no overall effect.For the United States factors such as openness, market capitalization and level of rigidness has significant effect on U.S. investments towards the EU countries. Factors such as market size, R&D, Infrastructure and labour cost turned out to have no significant effect on the location decision-making.These findings show that both U.S. and Chinese FDI into the European Union is complex and is influenced by a immense range of location determinants. We find that there are some different priorities regarding factors that influence the decision making of outward FDI from the two superpowers towards the European Union countries.