1. Areas of capital investment: real (receiving income in the form of profitfrom business activities) and financial (earning income in the form of a dividend orinterest).
2. The nature of participation in the investment process. Direct - carried outby investing capital in the authorized funds of enterprises, providing the investor withownership or control over the invested enterprise. Portfolio - investing capital in sharesand other securities, making a profit on shares or presence in this industry, and other(medium-and long-term international loans and loans of loan capital, both private andpublic).
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2.2 The PRC Investment Climate: Stages and Features of Formation,Current State and Prospects of Cooperation
2.2.1 The Impact of Economic Reforms on the Current State of China'sInvestment Climate
The Ministry of Commerce of the PRC informed Chinese citizens and the worldcommunity in its online statement that: "at the end of 2017, the total volume of foreigninvestment in China increased by 7.9% compared to the previous year to 877.56 billionyuan/136.33 billion US dollars (Zheng, 2019). The statement also says that accordingto statistics for 2017, “35,652 new enterprises with foreign capital were established inChina, which is 27.8% more than in 2016" (Kroeber, 2016). Similar information wasalso provided in the world investment report 2018 by UNCTAD (See Figure 2.1 inAppendix A).
Sustainable economic growth was provided by a variety of factors, includingthe special conditions created in 1978. Agricultural reforms, including the system ofhousehold responsibility, which underwent further changes over the next thirty years,provided a powerful impetus for the new period. China's economic reforms in thetwentieth century contain a vast body of information. In order to understand the impactof reforms on the investment climate, it is necessary to summarize and characterise themain features of economic transformations.
Table 4.3 Pair-wise correlation coefficients between variables
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CHAPTER 3 Literature Review .................... 49
CHAPTER 4 Research Hypothesis and Model Specification ....... 59
4.1 Research Hypothesis............................ 59
4.2 Data Collection ............................ 61
CHAPTER 5 Empirical Results .............................. 67
5.1 Model 1................................... 68
5.2 Model 2.................................. 73
CHAPTER 5 Empirical Results
5.1 Model 1
In order to account for the differences in FDI allocation decisions across theChinese provinces, was added into our models not only a dummy variable indicatingwest or east region but also such variables as “West” magnified by any other factor(“West * Market Size”, “West * Highways”). This kind of factor specification pursuestwo main reasons:
To identify the key differentiating variables in allocation decisions betweenWest and East;
To be able to use them in the panel analysis, since invariable in time regressorscannot be used in the fixed effects models and “West” is such a variable (equals 1 for“West” and 0 for “East”).
As was mentioned before, it was decided to test 3 models. With logarithms,without and with control variables multiplied with West. LnFDI and lnHighways might be insignificant for our model (with logarithms) as well as Highway and West mightbe insignificant with the model without logarithms, what was expected to be for theFDI. Also, West is negatively related to almost all the factors that were chosen, whatalso was expected.
Figure 5.1. The amount of FDI in different regions of China, 1990-2017 (RMB). Source:Author’s own summary from STATA
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CHAPTER 6 Conclusion
6.1 Theoretical and Research Findings
China is a unique example with remarkable changes since the announcementof the "Opening-up and Reform" policy in 1978. At the beginning, the reforms offeredto forei
