Have China¡¯s FDI Policy Changes Been Successful in Reducing Its FDI Regional Disparity?

Kang Yu, Xiangyong Tan and Xian Xin

No 704, Working Papers from China Agricultural University, College of Economics and Management

Abstract: From the very beginning of China¡¯s open door policy in 1979, China¡¯s preferential FDI polices have generally favored the coastal provinces, which has led to a pronounced regional disparity in FDI. Since 1992, the Chinese government has implemented a series of polices to reduce FDI regional disparity and diversify inward FDI to Western and Central provinces. This paper uses a regression-based approach to assess the contribution of China¡¯s preferential FDI policy changes toward FDI regional disparity. Our results suggest that the contribution of China¡¯s regionally preferential FDI polices in inward FDI disparity decreased from 24% in 1990 to 13% in 2005. China¡¯s preferential FDI policy changes dominate all the other factors in reducing China¡¯s inward FDI regional disparity during this period.

Keywords: Foreign Direct Investment; Regional disparity; Preferential Policy (search for similar items in EconPapers)
JEL-codes: F43 O40 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2007-11
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