The regional distribution of foreign direct investment in China

This paper analyses the determinants of the regional distribution of both pledged and realized foreign direct investment (FDI) within China. The econometric properties of the panel data set are examined using a standardized 't-bar' test for unit root. The empirical results indicate that there exists a long run relationship between the spatial distribution of FDI and a number of regional characteristics. Provinces with a higher level of international trade, lower wage rates, more R and D manpower, higher GDP growth rates, quicker improvement in infrastructure, more rapid advances in agglomeration, more preferential policies and closer ethnic links with overseas Chinese attract relatively more pledged FDI.