FDI distribution within China: An integrative conceptual framework for analyzing intra-country FDI variations

Abstract

The literature on foreign direct investment (FDI) has evolved in separate theoretical silos and a holistic conceptualization is yet to emerge. Research has focused mostly on inter-country differences and not much on explaining intra-country FDI variations. Traditionally FDI locations have been evaluated through country-level FDI determinants even though provinces differ widely in infrastructure and other attributes. Further, neither is the varying importance of FDI determinants to different industries factored in, nor are the differing FDI incentives from national and provincial governments integrated into a single framework. To address these gaps this study synthesizes insights from three streams of FDI research and develops an integrative conceptual framework that can comprehensively analyze intra-country FDI inflows. We demonstrate the usefulness of the framework by empirically analyzing FDI trends within China’s 31 provinces. The study thus makes a substantive contribution by offering scholars, policy-makers, and practitioners a holistic conceptual and methodological approach for understanding FDI trends within a country.