Author(s)

Ping Yang, Kuanqi Du

Corresponding Author

Ping Yang

ABSTRACT

Over the past two decades, foreign direct investment flowing into developing countries has experienced widespread growth and increasingly fierce competition. This caused the host government provided higher investment incentives and increased the number of bilateral investment treaties and regional investment agreements. This article explores the effectiveness of government policies and investment agreements in attracting FDI flows. In order to analyze the impact of economic variables such as infrastructure conditions, labor costs, annual GDP growth, real effective exchange rate, tax incentives, and bilateral investment treaties on China’s FDI over a 25-year span, this paper uses the OLS method to perform regression analysis on FDI inflow Multicollinearity and autocorrelation tests are performed on the model. It can be seen from the research that economic fundamentals is an important determinant of FDI inflows, and national incentive policies have also greatly promoted FDI inflows. However, the role of government agreements in attracting foreign direct investment into China is not obvious.

KEYWORDS

FDI, investment incentives, bilateral investment agreements