Wang Rui, Hu Xiao
Faculty of Professional Finance & Accountancy, Shanghai Business School, Shanghai, 200235, China
China has made great efforts to optimize the business environment and introduce FDI recently. This paper analyses whether the business environment in China can attract FDI. The entropy method is used to construct the business environment index. The data of 30 provinces in China are used to build panel data regression models. We find that business environment scores have significantly positive impact on FDI in the full sample as well as the eastern, central regions of China. Further analysis on the components of the business environment reveals that, overall, the economic and infrastructure environments can significantly increase FDI across the country. By region, in the eastern region, improvements in government, economic and infrastructure environments are more conducive to attracting FDI. In the central region, the government, economic, social and infrastructure environments are more effective in attracting FDI. In the western region, the economic and social environments have significant positive impact on FDI. This paper makes corresponding recommendations at the macro level including to improve the ease of investment and administrative services efficiency, to perfect infrastructure construction and social service systems.
Business Environment, Foreign Direct Investment, Entropy Method, Panel Data Model
Wang Rui, Hu Xiao. Study on the Impact of Business Environment on FDI and Comparative Analysis of Eastern, Central and Western Regions in China. Academic Journal of Business & Management (2023) Vol. 5, Issue 22: 34-42. https://doi.org/10.25236/AJBM.2023.052206.
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