The Determination of Foreign Direct Investment in Eastern China

FDI has been an increasing area of study. Many developing countries consider FDI inflows as an important source for economic development while multinational corporations consider FDI as a source for lowering the cost of production or a means to gain market entrance. The studies of FDI in China are no exception. This paper will focus on the Eastern Region by examining the determinants of FDI for the region as a whole, by excluding the two lesser jurisdictions and by only focusing on the Big Five jurisdictions to gain a better understanding of FDI in Eastern China. By estimating the effects of determinants of FDI in Eastern China Region from 1993 to 2005, we find the large market size and openness had a positive effect on Eastern China, wage rates have a statistically non-significant negative effect. As far as the level of education, there is only a positive effect on the Big Five.