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Determinants of FDI in producer services: evidence from Chinese aggregate and sub-sectoral data

Runda Gao (Centre for Business in Society, Coventry University, Coventry, UK)
Glauco De Vita (Centre for Business in Society, Coventry University, Coventry, UK)
Yun Luo (University of Southampton, Southampton, UK)
Jason Begley (Centre for Business in Society, Coventry University, Coventry, UK)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 25 August 2020

Issue publication date: 27 April 2021

217

Abstract

Purpose

The purpose of this paper is to examine the determinants of foreign direct investment (FDI) in producer services in China using both country aggregate and provincial sub-sectoral data.

Design/methodology/approach

This paper applies autoregressive distributed lag (ARDL) cointegration and panel data regression approaches in examining the determinants of Producer Service FDI (PSFDI).

Findings

Our results show differences between the determinants of aggregate FDI and PSFDI. Contrary to the typical influencing factors of general FDI (that include GDP, openness, low wages and environmental quality), the two main determinants of PSFDI inflows to China are found to be high wages and research inputs (specifically the number of research workers as a proxy for research intensity). Data drawn from 26 Chinese provinces disaggregated at sub-sector level of producer services corroborate the results.

Originality/value

We add to existing literature by identifying the key determinants of inward PSFDI in China also via a provincial-level data analysis and disaggregation at sub-sectoral level of producer services.

Keywords

Citation

Gao, R., De Vita, G., Luo, Y. and Begley, J. (2021), "Determinants of FDI in producer services: evidence from Chinese aggregate and sub-sectoral data", Journal of Economic Studies, Vol. 48 No. 4, pp. 869-892. https://doi.org/10.1108/JES-07-2020-0355

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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