THE DETERMINANTS OF GEOGRAPHICAL LOCATION OF FDI: AN EMPIRICAL ANALYSIS IN CHINA

This study conducts an empirical analysis on the determinants of FDI regional distribution in China. The dataset used for this study spans from 1990-2008 and involves regional-level data from 300 cities in China. The key findings of this paper can be summarized as follows: at regional level, foreign investors base their investment decisions by tax rates, geography, labor costs and market size. Moreover, tax incentive effects are proved to be greater in the eastern areas than in the western areas. This study provides some valuable insights into foreign investors' decision making and the economic costs/ benefits of FDI, which have important implications for scholars, practitioners and policy makers alike.