ABSTRACT
A locational framework for the location of Foreign direct investment (FDI) within a subnational context can be built upon a simple multinational enterprise model. A series of cross section analyzes on the locational model of FDI in China was conducted. The latent variable models assume that foreign investors are responsive to the basic characteristics of cities, while the factual variable models assume that foreign investors are attracted to specific attributes of cities. When the dynamic change of the general location pattern of FDI is discussed, the focus is the dynamic change of the model made possible by assuming the homogeneity of FDI, that is, the effect of locational specific variables on every dollar in any location is the same. While preferential treatment toward FDI is an important part of policy instruments, the special policy in China entails significant autonomous power for local city governments with more relaxed government control.
