Determinants of foreign direct investment in economies in transition: The Chinese experience

This study uses panel data methods to identify the determinants of foreign direct investment (FDI) into China. By estimating the effects of determinants of FDI in 30 provinces in China, we find that the traditional determinants, such as market size, infrastructure, wage, and transport costs, have significant effects. In addition, transition specific factors, such. as the level of privatization and the degree of openness, play important roles in determining the flows of FDI into China, and help explain the different attractiveness of the individual provinces to foreign investors.