Abstract Foreign direct investment is an important overseas economic development strategy in China. The exploration of it impact has great significance for China's opening up. This paper studies how financing constrains influence enterprises' foreign direct investment in China from the microcosmic viewpoint. A theoretical framework is set up to elucidate that the promotion of financing constraints will restrict foreign direct investment decision of labor intensive enterprises, but will promote foreign direct investment decision of capital intensive enterprise in reverse. Based on this, the theoretical deduction is verified by matching enterprises' data of Zhejiang province in China's Industrial Enterprise Database and List of China's Foreign Investment Enterprises (Institutions). Furthermore, the sample data regression shows that the foreign direct investment of state-owned enterprises, foreign-funded enterprises and heavy industrial enterprises are not restricted by financing constraints; but the foreign direct investment of non-state-owned enterprises, non-foreign-funded enterprises and light industrial enterprises are restricted by financing constraints. In addition, our zero-inflated regression and ordered data regression find that lower (higher) financing constraints increase the labor (capital) intensive enterprises' number of foreign direct investment projects and accelerate its investment decision time, which is consistent with the influence mechanism of foreign direct investment tendency.
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Received: 23 March 2016
Published: 15 November 2016
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Corresponding Authors:
YU Guansheng
E-mail: yuguansheng@163.com
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