ABSTRACT
This chapter examines the urban attributes that determine the spatial distribution of foreign direct investment (FDI). It focuses on what makes a city attract more FDI. The chapter analyses a cross temporal analysis is conducted for each year after 1985 by using both the factual variable model and the latent variable model. Additional attention is paid to elaborating on the implications of the dummy variables in the models. After that, the conclusions on the major locational determinants of FDI in China and the dynamic changes over time are drawn. The models spanning from 1985 to 1993 are consistent in that development and city size are the main explanatory variables. If FDI was responsive to a more dynamic economic environment, the statistical relationship is most likely to be the negative one between VALADD% and pledged FDI. The possible explanation may lie in changes in the locational mechanism of FDI.
