The Study On The Characteristics And Influence Mechanisms Of Cultural Diversity In Foreign Direct Investment

In recent years,with the continuous improvement of China's comprehensive strength and the continuous improvement of the domestic investment environment,China has become an important target country for foreign direct investment(FDI).However,from the current situation of foreign investment in China,it is obvious that there is a phenomenon of uneven distribution among the regions,such as more in the east and less in the west,more in the south and less in the north.Then,what factors lead to FDI investment in China showing such differentiated characteristics?At present,although there are abundant literatures about the factors affecting the regional distribution of FDI in academic circles,most scholars analyze it from the aspects of government policies,market size,exchange rate fluctuations,geographical characteristics and so on,and seldom discuss and analyze it from the perspective of cultural diversity.As a recessive environmental factor,cultural diversity must play a certain role in attracting foreign investment.This paper is based on this point to write the paper.This paper takes China as an example to study and analyze the impact of cultural diversity on FDI from the perspective of dialect.This paper based on the economic development data of 28 provinces and municipalities in China from 1999 to 2017 and the dialect diversity index constructed by Xu Xian-xiang et al.(2015)tests the role of cultural diversity on FDI and its impact mechanism through simple linear regression,subsample regression,time trend analysis,mechanism variable regression,etc.There are several findings form this paper.Firstly,one finding shows that cultural diversity can inhibit the introduction of FDI,but the intensity of inhibition varies among regions in China.Secondly,this inhibition does not disappear with the evolution of time,but it is inverted U-shaped,which means that the intensity of cultural diversity on the introduction of FDI has the characteristics of increasing first and then decreasing.Thirdly,the analysis of impact mechanism shows that there are synergies between cultural diversity and economic vitality,human capital,government support,financial development level,infrastructure status and social division of labor(or market demand).However,the synergy effect needs to overcome certain conditions,that is,there is a threshold effect.Fourthly,the empirical results also show that cultural diversity can hinder the introduction of FDI by inhibiting the opening level of each other,weakening the local innovation level,reducing the local population density and increasing the inequality of local income.