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Determinants and performance index of foreign direct investment in China's agriculture

Licai Lv (College of Economics and Management, South China Agricultural University, Guangzhou, People's Republic of China)
Simei Wen (College of Economics and Management, South China Agricultural University, Guangzhou, People's Republic of China)
Qiquan Xiong (College of Economics and Management, South China Agricultural University, Guangzhou, People's Republic of China)

China Agricultural Economic Review

ISSN: 1756-137X

Article publication date: 2 February 2010

2723

Abstract

Purpose

Since attracting foreign direct investment (FDI) to agriculture is now an important policy concern for the Chinese Government, it is necessary to develop benchmarks of the inward FDI performance. The purpose of this paper is to explore the determinants of FDI and evaluate the inward FDI performance in China's agriculture.

Design/methodology/approach

A multi‐variable regression model is conducted to examine the determinants of FDI in China's agriculture over the period from 1985 to 2006. In order to evaluate the inward FDI performance, the inward FDI performance index is developed at industrial level.

Findings

The results indicate that agricultural market size has a significant positive effect but agricultural import has a negative effect on FDI inflow to China's agriculture. The effect of agricultural export is positive but not statistically significant. It is stated that the orientation of FDI policy during China's agricultural opening process is still not clear, and the decrease of the share of fiscal expenditure is apparently not conducive to attract more FDI in China's agriculture. In addition, the performance index shows the inward FDI performance in China's agriculture is improving but not satisfactory compared to its market size.

Originality/value

The inward FDI performance index is tentatively used to evaluate the performance of FDI inflow to China's agriculture. The results of this paper have significant policy implications for the government to determine where to head in using FDI in China's agriculture in the future.

Keywords

Citation

Lv, L., Wen, S. and Xiong, Q. (2010), "Determinants and performance index of foreign direct investment in China's agriculture", China Agricultural Economic Review, Vol. 2 No. 1, pp. 36-48. https://doi.org/10.1108/17561371011017487

Publisher

:

Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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