The impact of globalization on FDI: An empirical analysis of the FDI determinants in China

Abstract: The world under globalization is moving toward a single market, where national economies are becoming more integrated and interconnected. In this context, over the last decades, the perception of FDI positive spillovers has made developed and developing countries competing to attract foreign investors. This study analyses the determinants of FDI during the globalization process, both theoretically and empirically using China as a case of study. It hypothesizes that a change in five sets of factors, based on the recent literature and empirical studies on developing countries and China, has occurred. These assumptions are empirically tested utilizing a panel data for 30 Chinese provinces from 1996 to 2007. The results provide some evidence of a reconfiguration of the FDI determinants due to the globalization process.