Study On Location Distribution Of Foreign Direict Investment Based On Cities’ Business Environment

With the deepening of reform and opening up,it is evident that foreign investment plays an important role in China’s economic development.At the same time,the development of business environment varies from city to city.However,it is of great theoretical and practical significance to study the relationship between the urban business environment and the location distribution of FDI to promote the balanced distribution of foreign capital and realize the coordinated development of urban economy in different regions.In this paper,firstly,a literature review was made on location selection of foreign direct investment and business environment.Then,on the basis of concept definition and factor analysis of urban business environment,the paper built an evaluation index system of city business environment which contained 5 grade I indexes such as factor costs,market environment,innovation environment and infrastructure,and 20 grade II indexes were included such as labor costs,energy costs,land costs.The evaluation results show that the overall business environment of eastern cities is significantly better than that in central and western cities,and the development is relatively stable.In addition,the market environment,the social service environment and the innovation environment of eastern cities are significantly better than those of central and western cities.Central cities have a slight advantage in factor costs over western cities,and western cities are in a favorable position in social service environment.Furthermore,with the using of entropy weight the business environment of 35 large and medium-sized cities in China comprehensively evaluated.The test was based on 2008-2016 annual time data.The results have shown that compared with the central and western cities,the eastern cities have better business environment while the central cities had better business environment than the western cities.Moreover,based on the evaluation results of the urban business environment,the dynamic panel regression model was used to empirically test the overall urban business environment and the impact of various factors on the distribution of FDI in China from the national and different regions perspectives.The empirical results show that the city’s business environment has a significant positive impact on FDI inflows;Market environment and the development of innovation environment are the important factors that multinational enterprises are considered when choosing the eastern cities.When foreign investors invest in central cities,they will focus on the agglomeration economy,market environment and factor cost.Foreign investment in western cities will focus much on the level of innovation environment.Finally,according to the overall theoretical research and empirical conclusions,based on different regional cities the paper puts forward the policy suggestions to promote the balanced distribution of foreign capital inflow.