EU foreign direct investments to China

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This dissertation investigates the spatial characteristics and location choices of EU foreign direct investment (FDI) in China, particularly following the recent enlargement of the EU to include ten new member states with development levels akin to certain Chinese provinces. A dataset of EU FDI inflows at the provincial level is constructed using annual statistical yearbooks, leading to a groundbreaking econometric analysis of the spatial determinants of EU FDI in China. The findings reveal that provincial GDP, revealed comparative export advantage, and a tertiary educated workforce significantly influence EU FDI, with varying levels of statistical significance. This analysis provides insights into the motivations of EU investors in China compared to structurally similar Central and Eastern European Countries (CEECs). Additionally, the research introduces the concept of "EU FDI deflection," applying a model to fourteen selected locations in the new EU member states and China. The study finds that structural similarity, quantified by Euclidian distance, is a key factor in explaining the likelihood of EU FDI deflection. Ultimately, this dissertation contributes to the FDI literature by examining the determinants of EU FDI in China and exploring the interplay between regional integration and inter-regional FDI distribution.