Determinants of the Location of Foreign Direct Investment in China

Determinants of the Location of Foreign Direct Investment in China.
Dingshan WAN
CCER 01 10162037
1
¢ñ.INTRODUCTION
Undoubtedly large inflow of foreign direct investment (FDI) has greatly contributed to the rapid economic growth in China since 1980¡¯s. From the advent of reform in 1978 to 1995 China has received 128.1 billion U.S. dollars in FDI. Recent FDI inflows to China account for 40 percent of such flows to all developing countries combined. In fact, China emerged as the largest recipient of FDI among developing countries beginning in 1992, and has been the second largest recipient in the world since 1993.
While the gross volume of FDI is much impressive, however, potential problems exist. The pattern of FDI in China is highly geographically concentrated. Of the total amount of FDI that China has received since 1989, the coastal areas¡¯ share has been over 90 percent. In contrast, the inland provinces, which are considerably less developed and poorer, and in greater n...