Research On The Influence Of Service Industry Agglomeration On The Selection Of FDI Location

Through the economic crisis of 2008, foreign investors make location choices of overseas investment more cautious than before. Meanwhile, the Chinese government has cancelled some preferential policies to attract FDI.The move means the threshold of Multinational Companies enter into China has been improved. Even under the influence of these negative factors,the amount of FDI flowing into China still maintain growth, so there should be some other positive factors promote FDI enter into China. From the angle of industry agglomeration, this paper investgates the influence of service agglomeration on FDI location selection with panel data of 281 cities in China, and the target of this paper is find out the different influence of different kinds of service industries agglomeration. In theoretical study, Firstly, the paper review the relevant theories and researches of the location selection of FDI and service agglomeration; Secondly, according to the existing research conclusions, this paper reviews the mechanism of FDI location selection, the mechanism includes both traditional factors and the effect of service agglomeration. In empirical part, the paper analyze this infulence of service agglomeration on FDI location selection based on employment data of 281 cities.The analysis consists of three parts, the first part based on the overall service agglomeration angle; the second part, the second part based on three kinds of service agglomeration(producer services, consumer services, public services) on account of their difference;the third part based on the different infulence of 14 service sub-industry agglomeration. The conclusions are as follows: Firstly, service agglomeration can significantly promote the FDI flows into China and manufacturing agglomeration positive influence is also significant; Secondly, the stimulating effect mainly comes from producer services and public services. Because of the difference of development of service industry between areas, the effect is also different; Thirdly, in the Producer services, there are six service sub-industries agglomeration promot FDI get into area; in the Public services, there are three service sub-industries agglomeration promot FDI get into area.