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Research Article
A Spatial Econometric Analysis on the Location Determinants of FDI in Producer Services

Ping Jiao and Minghui Jiang

Journal of Applied Sciences, 2014, 14(21), 2804-2811.


This study analyzes the location determinants of Foreign Direct Investment (FDI) in producer services from spatial correlation and traditional factors and employs Moran’s I index, Spatial Autoregressive Model (SAR) and Spatial Error Model (SEM) to perform empirical test based on the data of 24 provinces of China in the years of 2004-2011. The results indicate that spatial correlation is an important factor influencing the location choice of FDI in producer services, the distribution of FDI in producer services of China presents the feature of spatial agglomeration and positive spatial correlation, adjacent regions share similar values of FDI and the inflow of FDI in producer services of a certain region is correlated to those of its neighbors. As for the traditional factors, the degree of agglomeration in producer services is the most important among the positively correlated factors and the scale of FDI in manufacturing industry is the second important, followed by the degree of openness, the development level of the manufacturing industry and the condition of human capital, while the inflow of FDI in producer services is negatively correlated to system and policy restraints but the correlation is not significant.

ASCI-ID: 35-6089

Cited References Fulltext

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