Ridge Regression Analysis on the Influential Factors of FDI in Jiangsu Province/ANALYSES DE RIGDE REGRESSION SUR LES FACTEURS INFLUENTS DE FDI DANS LA PROVINCE DU JIANGSU

Article excerpt

Abstract:

As Chinese eastern coastal developed areas, through the use of foreign capital, Jiangsu Province has not only promoted economic growth rapidly, enhanced the regional comprehensive competitiveness, promoted employment, but also created a new famous mode of economic development called Sunan. Based on the qualitative analysis of factors affecting the inflow of foreign capital in Jiangsu, the paper establish a mathematical model between the FDI and major economic indicators in Jiangsu, in accordance with its own characteristics. And then taken 1992-2006 time-series data for the background, the paper use the method of ridge regression to analysis the influential factors of FDI in Jiangsu.

Key words: foreign direct investment, ridge regression, factors, Jiangsu

Résumé: En tant qu'une région développée dans la côte-est de la Chine, grâce à l'usage du capital étranger, la province du Jiangsu a non seulement eu une croissance économique rapide, augmenté la compétitivité générale, créé desemplois mais aussi inventé un nouveau modèle du développement économique qu'on appelle Sunan. En se basant sur les analyses qualitatives des facteurs affectant l'afflux du capital étranger dans la province de Jiangsu, l'article étalit un modèle mathématiqueentre le FDI et les principaux indicateurs économiques dans la Province, conformément à ses caractéristiques appropriées. Et puis, en employant les données de la période de l'année 1992 à 2006 comme l'arrière-plan, l'article utilise la méthode d'analyse de ridge régressionn pour étudier les facteurs influents de FDI dans la province de Jiangsu.

Mots-Clés: investissements directs étrangers, ridge régression, facteurs, Jiangsu

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1. INTRODUCTION

Jiangsu is one of the most effective provinces of the development of the open economy in China. And its scale and the amount of introducing foreign capital maintains the leading position for many years. In 2007, The new foreign-funded enterprises registered 5,986. The registration agreement foreign capital was 435.8 billion U.S. dollars which was increased of 12.4% than last year and the actual one was 218.9 billion U.S. dollars which was increased of 25.6%. The amount of the actual foreign direct investment in 2007 was over passing the total foreign investment in 2004. All these is due to the unique geographical advantages, solid industrial base, huge market capacity, strong science and technology, education, research, better infrastructure system and friendly foreign investment policies and so on which provide a good external environment for the inflow of foreign capita in Jiangsu. This article studies the influential factors of FDI in Jiangsu mainly from the empirical perspective.

2. LITERATURE REVIEW

Overall, there are mainly two empirical methods for many Chinese scholars studying the influential factors of FDI: one is field surveys and questionnaires; another is the economic measurement methods. For example, Li Xiaojian (1996) through the questionnaire study found that among 55 Hong Kong enterprises investment in the Chinese mainland, 46 enterprises took "reduce production costs" as the most important investment motive and 8 enterprises took " enter Chinese market "as the main motivation. Sun Zhaoming, Zhang Shaojiang and Gao Xiangmei(2006) used cointegration analysis and Granger test of the economic measurement method to study the influential factors of FDI in China. And it founded that the size of the domestic market, labor costs and exchange rates is the main impact factors of FDI inflows which have shown the same direction changes. Particularly, the size of the domestic market is the main reason for attracting foreign investment; labor advantages are the second factor. The third is the exchange rate.

To sum up, although there already are a large number of theoretical and empirical researches on the influential factors of FDI, today the academic community does not form a unified theory. …