Abstract
This paper adopts a conditional logit model to empirically examine the changes of Japanese investors’ location choices in response to China’s recent reorientation of its development strategy from the eastern coast to interior areas. This strategy adjustment is intended to attract FDI into China’s western region in hopes of promoting its economic growth and reducing economic inequality. Future policy suggestions on FDI attraction to western China are proposed based on the empirical details.
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This paper was the winning entry of the 19th Charles M. Tiebout Prize in Regional Science, and was presented at the 44th Annual Meeting of the Western Regional Science Association in San Diego, CA, February 2005.