[The Impact of China's Foreign Direct Investment (FDI) in Nigeria, a failed attempt to develop Nigeria.]

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Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

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Abstract

This paper sets out to analyze the determinants of foreign direct investment (FDI) on both the country and regional level through the extensive review of past research studies, as well as through the development of a multiple regression model for identifying key determinants of FDI at the regional level in China during the critical year of 2002. The development of a multiple regression model to identify statistically significant determinants of FDI by region in China. As reforms continue to take place, FDI in China has been unevenly distributed. This paper examines five potential determinants of FDI in 30 regions (including provinces, centrally controlled municipalities, and semi-autonomous regions) of China using a regression model. The specific focus is on 2002, as it is the first full year after China's accession to the World Trade Organization, and the first year in which China exceeded the USA in attracting FDI. From this initial study, one can conclude that the government should consider encouraging capital-intensive FDI through the further development of a skilled workforce. This means increasing funding for higher education, and infrastructure, while also encouraging more openness in state-owned enterprises. This paper sets up further research that may help expose regions with greater potential for FDI, as well as identifying regions which need to improve certain conditions in order to receive more FDI.

Table of Contents

CHAPTER 1: INTRODUCTION6

CHAPTER TWO: LITERATURE REVIEW9

Empirical works12

CHAPTER THREE: METHODOLOGY32

Empirical framework32

CHAPTER FOUR: ANALYSIS OF RESULTS39

CHAPTER FIVE: CONCLUSION43

Limitations45

REFERENCES49

APPENDIX53

Chapter 1: Introduction

The study of foreign direct investment (FDI) in China has increased a great deal since the reforms under Chairman Deng Xiaoping in the late 1970s and early 1980s, with further acceleration of interest and investment due to their accession to the World Trade Organization in 2001. As the rate of globalization increases, and the economic linkage between countries strengthens, FDI is playing an increasingly important role in the world economy. FDI is widely regarded as an amalgamation of capital, technology, marketing, and management (Cheng and Kwan, 2000, 54). Many countries consider the attraction of FDI as a crucial element in their strategy for economic development. In this paper, we examine if certain variables are significant determinants of FDI distribution in 30 different regions in China. (Akinlo, 2004, 627)

This is particularly notable as in 2002; China exceeded the USA in becoming the largest host of FDI (Lu, 2003a, b, c). Though there are many studies on the effects of FDI on the country level, relatively few have focused on the regional ...