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Foreign Direct Investment, Regional Geographical and Market Conditions, and Regional Development: A Panel Study on China
This paper uses regional panel data to investigate the mechanism of how FDI has contributed to China’s regional development through quantifying regional marketization level. It is found that FDI inflow generates a demonstration effect in identifying regional market conditions for investment in fixed assets and hence affects industrial location.
Link
http://rspas.anu.edu.au/economics/publish/papers/wp2005/wp-econ-2005-12.pdf