FDI convergence and Spatial Dependence between Chinese Provinces

This study aims at investigating the spatial dimension of the FDI. Considering the distribution of FDI between the provinces, our purpose is the spatial dependency that may be observed. Using data for 1992-2002, we find that taking into account the regional specification induces significant FDI convergence process between Chinese provinces. We also find that correcting for the bias resulting from spatial autocorrelation in errors terms leads to higher estimates of the beta convergence coefficients. One can deduce that this is somewhat important for Chinese authorities to promote an attractivity policy based on regional complementarities rather than on FDI quantity