HDR Seminar: Determinants of Foreign Direct Investment Inflows: A new perspective for the Chinese experience
The School of Economics invites you to a HDR seminar presented by Andy Cheung (University of Sydney).
China historically, and continues to be, a large recipient of global foreign direct investment (FDI) capital. The Chinese experience is not isolated, as there are a number of developing or emerging economies also attracting large amounts of FDI. In response to the increasing volume of FDI transactions, much research has emerged on the determinants of FDI inflows, though analysis at the industry level is sparse. This is in part due to the limited data available at the industry level, especially for developing nations.
This paper sheds new insights on the determinants of FDI inflows by taking advantage of available industry data for China. China is chosen due to its top performance as a FDI haven and for its available industry data. In much of the current literature, especially for the Asian region, FDI in the service sector is largely ignored whilst there are many studies on manufacturing FDI. Given China’s gradual evolution from a manufacturing-dominated economy to a service-based one, the use of recent data has the advantage of accounting for the recent growth in service FDI and allows inferences to be made about FDI in the service industry which is lacking in the current literature.
This paper analyses the service and secondary industries separately using panel econometric techniques to provide insights into how the two industries differ, or do not differ, in attracting global foreign capital. This may serve as a template, not only for China, but for other developing countries, for government policy directed towards FDI attraction.