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Optimizing Business Environment and FDI Motivation——Market Seeking or Efficiency Seekin

【Authors】
LIU Jun,WANG Changchun
【WorkUnit】
Shanxi University of Finance & Economics,030006.
【Abstract】

Against the background that optimizing the business environment (OBE) has become a new competitive advantage of attracting foreign investment for developing countries,it is crucial to study its effects on FDI motivations of foreign-owned enterprises. This paper examines the effects and mechanisms of FDI motivations of foreign-owned enterprises influenced by OBE in developing countries. The results show that OBE weakens (enhances) the FDI motivation of market (efficiency) seeking of foreign-owned enterprises,because the elevation of competitiveness of domestic enterprises,the withdrawal of preferential resources for foreign-owned enterprises and the existence of foreign invested processing trade enterprises make the OBE reduce the productivity of foreign-owned enterprises. A further investigation of subsamples finds that the above conclusions only hold in the solely foreign-owned enterprises and industries and foreign-owned enterprises in low-income countries. For the joint ventures,foreign-owned service enterprises and foreign-owned enterprises in high-income countries,OBE has no significant effects on their FDI motivations,and the mediating effect of productivity does not exist yet. This paper from the perspective of OBE provides more specific policy enlightenment for the formulation of China's current foreign investment absorbing policy.


JEL:F18,F21,D21

【KeyWords】
Business Environment,FDI Motivation,Market Seeking,Efficiency Seeking