FISCAL TRANSPARENCY AND FOREIGN DIRECT INVESTMENT IN CHINA

Jr-Tsung Huang () and Ming-Lei Chang
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Ming-Lei Chang: #x2020;Chung Yuan, Christian University, Taoyuan 32023, Taiwan

The Singapore Economic Review (SER), 2018, vol. 63, issue 04, 839-859

Abstract: This study aims to explore the influence of fiscal transparency on foreign direct investment (FDI, hereafter) in China under the consideration of the spatial dependence of FDI. The study adopts panel data for 30 provinces from 2010 to 2014 to estimate a one-way fixed-effect spatial Durbin model. The primary finding of this study is that a higher level of fiscal transparency will attract more FDI, while keeping other factors constant and considering the spatial dependence of FDI. Other explanatory variables, such as gross regional product and the density of railways, also have statistically significant influences on FDI. Consequently, this study suggests that the Chinese local governments should improve their fiscal transparency in order to attract more foreign capital and further stimulate their economic development as well as China’s economic growth as a whole.

Keywords: China; foreign direct investment; fiscal transparency; one-way fixed-effect spatial Durbin model (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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DOI: 10.1142/S0217590817420127

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