Third-Province Effects on Inbound FDI: Evidence from Chinese Provinces

Mingming Pan

Eastern Economic Journal, 2016, vol. 42, issue 2, 215-231

Abstract: The literature of Foreign Direct Investment (FDI) determinants is broad and deep. However, no previous research has formally considered spatial linkages of regions implied by the strategies of Multi-National Enterprises (MNEs) inside a country. Inspired by the recent FDI theories emphasizing third-country effects, this research explores MNE strategies within China and the implied spatial linkages of Chinese provinces in receiving FDI. The spatial econometric estimations reveal the existence of third-province effects. The empirical evidence shows that spatial effects should not be neglected in studies of FDI determinants within a country; furthermore, hypotheses on spatial linkages cannot be rigidly borrowed from FDI theories.

Date: 2016
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