An Empirical Analysis of Factors Affecting Foreign Direct Investment: The Case of Guangdong Province in China

서지정보

· 발행기관 : 국제지역학회
· 수록지 정보 : 국제지역연구 / 25권 / 3호 / 71 ~ 95페이지
· 저자명 : Xuexia Zheng, UTAI UPRASEN

초록

Since the end of 1970s, China has implemented opening up and economic reform policies. China has become a significant destination of inward foreign direct investment (FDI) from various countries. Guangdong province has taken a leading role on such policy implementation. Consequently, it turned to be the largest recipient of FDI among 31 provinces and municipalities of Chinese mainland. Most of the existing works investigate the determinants of inward FDI of China at a country level. The province-level research is scarce. Furthermore, the current evidences indicate that although the total FDI inflows of Guangdong have increased over time, its FDI share has decreased remarkably since 2003. Hence, it is very crucial to examine the determinants of FDI inflows of Guangdong province. As a result, our research scrutinizes the factors affecting inward FDI in the case of Guangdong province by using autoregressive distributed lag (ARDL) model with annual data from 1990 to 2019. Additionally, we employ the Toda-Yamamoto Granger causality test to increase the robustness of our empirical results. The findings suggest that inward FDI of Guangdong province is determined by average wage, per capita GDP, infrastructure and real effective exchange rate. Trade openness is insignificant. These empirical findings are also supported by the Toda-Yamamoto Granger causality test.

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