Determinants of Chinese OFDI in European Union: An empirical study on location factors

Abstract: What are the motives that drive Chinese investments into European Union? And even more, what determines the location choice? These are questions to which the paper seeks to find an answer to by conducting an empirical analysis with the use of panel data regression. Having most of Chinese investment flowing in only few Western European countries it is important to observe what determines the location choice that triggers a preference for these, whereas other countries manage to attract only small shares. The results provide strong evidence on the importance of bilateral trade and trade openness, as well as the role of infrastructure, but provide no or little evidence to support other motives found within theoretical framework of FDI.