Analysis of the Effect of CEPA on FDI to Mainland China from Hong Kong
- 1 School of Economics, Jinan University, Guangzhou, China
Abstract
Regional economic integration has got grea t achievements both in practice and theory since 1 980s, which promotes the progress of the world economic liberalization. Besides the trade creation and diversion effect which had been researched widely, regional economic integration agreement also would create investment among members, and this dynamic investment effect now has been the main factor which pushes the progress of integration. Based on DID model and Gravity Model, this paper examines the influence of CEPA on FDI to Mainland China from Hong Kong by setting matched group, using 1998-2013 FDI from Hong Kong as sample. The conclusion is that CEPA and its supplemental agreements play a positive role on attracting Hong Kong FDI to Mainland China. With the transformation of development model in Mainland China, Hong Kong will invest more capital in knowledge-intensive Service industries in the future.
- Kindleberger, C.P. (1996) European Integration and the International Corporation. Columbia Journal of World Business, 1, 383-390.
- Baldwin, R.E., Forslid, R. and Haaland, J. (1995) Investment Creation and Investment Diversion: Simulation Analysis of the Single Market Programme. NBER Working Paper No. 534.
- Donnenfeld, S. (2003) Regional Blocs and Foreign Direct Investment. Review of International Economics, 11, 770-788. http://dx.doi.org/10.1046/j.1467-9396.2003.00417.x
- Barthel, F. and Neumayer, E. (2012) Competing for Scarce Foreign Capital: Spatial Dependence in the Diffusion of Double Taxation Treaties. International Studies Quarterly, 56, 645-660. http://dx.doi.org/10.1111/j.1468-2478.2012.00757.x
- Berger, A., Busse, M., Nunnenkamp, P. and Roy, M. (2013) Do Trade and Investment Agreements Lead to More FDI? Accounting of Key Provision inside the Black Box. International Economics and Economic Policy, 10, 1-26. http://dx.doi.org/10.1007/s10368-012-0207-6
- Neumayer, E., Nunnenkamp, P. and Roy, M. (2014) Are Stricter Investment Rules Contagious? Host Country Competition for Foreign Direct Investment through International Agreements. WTO Working Paper.
- Blomstrom, M., et al. (1998) Regional Economic Integration and Foreign Direct Investment: The North American Experience. Working Paper Series in Economics and Finance No. 269.
- Tian, L. (2011) Analysis on the Economic Effect of North American Free Trade Agreement. PhD Thesis, Jilin University.
- Bende-Nabende, A., Ford, J.L. and Slater, J.R. (1999) The Impact of FDI on the Economic Growth of the ASEAN-5 Economies, 1970-1994: A Comparative Dynamic Multiplier Analysis from a Small Model with Emphasis on Liberalisation. Department of Economics, University of Birmingham in Its Series Discussion Papers with Number 91-18.
- Guo, H. (2009) ASEAN Regional Economic Integration and its Effects on Trade and Foreign Direct Investment. Asian-Pacific Economy, No. 5, 38-41.
- Han, D.-G., Yeo, T.-D., Yoon, Y.-M. and Yoo, S. (2004) How Will the China-Japan-Korea FTA Affect the Inward FDI to Korea. Sungkyunkwan University Working Paper, 3-4, 101-129.
- Sun, W. (2004) Hong Kong Investment Prospects under CEPA. Management World, No. 12, 134-135.
- Yuan, C.P. and Wu, K.H. (2006) Evolution and Spreading Effect on Direct Investment Route among Guangdong, Hong Kong and Macaw-Based on the Convenience of Direct Investment Prospective. Journal of Guangdong University of Finance, 21, 70-78.