Spatial-temporal patterns and determinants of foreign direct investment in China

Abstract

This paper analyzes the location of foreign direct investment (FDI) in China, making special use of GIS to analyze the multi-scalar spatial-temporal distribution of FDI. The paper uses spatial statistics including Moran’s I index, Getis and Ord’s G statistics, and retrospective analysis, to detect spatial and temporal clusters. The paper also employs Geographically Weighted Regressions (GWR) to identify variant locational determinants of FDI across different regions and provinces. We have found that while new concentrations of FDI have formed in the interior, the eastern region still dominates FDI distribution. Moreover, the concentration of FDI moves among provinces within eastern China, from Guangdong toward the Pan-Yangtze River Delta (Pan-YRD) and Bohai Rim Region (BRR), especially metropolitan areas of Shanghai, Beijing, and Tianjin. Our modeling results show that institution, transportation, and agglomeration are major factors determining FDI location in China. However, Guangdong, the Pan-YRD and BRR have different dominating factors determining the concentration. Institution is the most influential to Guangdong, transportation is the most influential to the Pan-YRD, and agglomeration influences the most to the BRR.