Factors influencing FDI location choice in China's inland areas

Laijun Luo, Louis Brennan, Chang Liu, Yuze Luo

Research output: Journal PublicationArticlepeer-review

24 Citations (Scopus)


Since 1978, the bulk of foreign direct investment (FDI) has gone to the south-eastern coastal areas in China, with only a small portion received inland. With the launch of the Western Development Strategy in 2000 and the Central China Rising Strategy in 2004, the choice of investment locations has expanded to inland areas. Based on panel data covering 98 inland cities from 1999 to 2005, this study identifies location preference variables for FDI invested in China's inland areas, and finds that well-established factors such as natural resources and low labor costs are not important factors in determining FDI locations within China's inland. Instead, policy incentives and industrial agglomeration are the most important factors. The findings of the present study have policy implications for both host country authorities and multinational corporations.

Original languageEnglish
Pages (from-to)93-108
Number of pages16
JournalChina and World Economy
Issue number2
Publication statusPublished - Mar 2008


  • China
  • Foreign direct investment
  • Location choice

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)


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