The evaluation of FDI inflows into China from selected ASEAN countries using panel estimation

• Main Authors: Hassan, Sallahuddin, Ibrahim, Fatimah Wati, Abu Bakar, Nor'Aznin, Hidthiir, Mohamad Helmi
• Format: Conference or Workshop Item
• Language: English
• Published: 2007
• Subjects: HG Finance
• Online Access: http://repo.uum.edu.my/2542/1/Sallahuddin_Hassan.pdf; http://repo.uum.edu.my/2542/

China has recently embraced globalization in the area of trade and foreign direct investment (FDI) by joining WTO. Globalization has had positive results on its economic growth through trade expansion and FDI that opened new channels for economic expansion. The Fourth Ministerial Meeting of the WTO in Doha, Qatar approved China's Protocol of Accession. China's accession to the WTO means a more open China. As a result, China has transformed itself from one with virtually no foreign-invested firms to the largest developing-country destination for FDI. Giving the above scenario, the purpose of this paper is to evaluate the FDI inflows in China from the selected ASEAN countries using panel data analyses. The FDI model has been utilized in determining factors that influence FDI inflows into China from selected ASEAN countries. In panel estimation, two alternative models, one-way fixed effect model and random effect model were used to estimate factors affecting the FDI inflows into China. The results of the study are consistent with the predictions of the previous study particularly related to trade openness (OPENESS) and relative exchange rate (RELEXC). We found evidence that OPENESS and RELEXC are an important factor in influencing FDI flows between selected ASEAN countries and China.