EU foreign direct investments to China

The main research question of this dissertation relates to the spatial characteristics and location choice of EU FDI to China in the context of an EU that has enlarged recently to incorporate ten new countries with levels of development comparable to some of the Chinese provinces. In the first place, a dataset of EU FDI inflows at provincial level is created based on the annual provincial statistical yearbooks, and a pioneering econometric study on the spatial determinants of EU FDI to China is conducted. The empirical results show that provincial GDP (at the 1 per cent level), revealed comparative export advantage (at the 1 per cent level) and tertiary educated workforce (at the 10 per cent level) are positive and significant determinants of EU FDI to China. Knowledge drawn from the results of this first set of empirical analysis is essential to understand the motivations behind EU investors in China, when compared with fairly structurally similar CEECs. A second part of the empirical research refers to the issue of FDI deflection proper. This dissertation proposes one step forward in the literature on FDI theory and introduces for the first time the concept and a model of „EU FDI deflection“ by applying it to the fourteen chosen locations in the new EU member states of the CEECs and China. It is found that structural similarity (measured by the Euclidian distance) between locations is an important variable in explaining the probability of occurrence of EU FDI deflection. The main contribution of this dissertation to the FDI literature is to analyze the location determinants of EU FDI (as an individual FDI home country) to China, and to explore the interaction existing between regional integration (i. e. the EU fifth enlargement) and inter-regional FDI allocation (i. e. the CEEC-8 versus China).