Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China

K.C. Fung, Alicia García-Herrero (), Hitomi Iizaka () and Alan Siu ()
Additional contact information
Alicia García-Herrero: Banco de España
Hitomi Iizaka: University of California at Santa Cruz
Alan Siu: University of Hong Kong - School of Economics and Finance
Authors registered in the RePEc Author Service: Alicia Garcia Herrero

No 616, Working Papers from Banco de España

Abstract: In this paper, we examine empirically whether hard infrastructure, in the form of more highways and railroads, or soft infrastructure, in the form of more market oriented institutions through deeper reform, lead to more foreign direct investment (FDI) in China. We use data of outward FDI from the United States, Japan, Hong Kong, Taiwan and Korea to various regions of China from 1990 to 2002. We control for the standard determinants of FDI, namely regional market size, wage rates, human capital and tax policies. We add indices of hard and soft infrastructure and find that soft infrastructure, in the form of more market oriented institutions through deeper structural reform, consistently outperforms hard infrastructure as a determinant of FDI.

Keywords: china; fdi determinants (search for similar items in EconPapers)
JEL-codes: F21 F23 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2006-06
New Economics Papers: this item is included in nep-cna, nep-dev, nep-sea and nep-tra
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http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/06/Fic/dt0616e.pdf First version, June 2006 (application/pdf)

Related works:
Journal Article: HARD OR SOFT? INSTITUTIONAL REFORMS AND INFRASTRUCTURE SPENDING AS DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN CHINA* (2005)
Working Paper: Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China (2005)
Working Paper: Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China (2005)
Working Paper: Hard or Soft? Institutional Reforms and Infrastructure Spending as Determinants of Foreign Direct Investment in China (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0616

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