The Impact of Industrial Agglomeration on the FDI Location Selection

Since the reform and opening up, the main factors that affect the multinational corporations' location choice in making direct investment in China have been evolving.In mid and late 1990s, industrial agglomeration has become an important influence factor.In this paper, we will base on the framework of industrial agglomeration theory, the traditional investment theory, and use multiple linear regression model to analyze the factors on the choice of location of foreign direct investment.It is found that the industrial agglomeration has replaced the traditional location selection factors as an important force to influence the investment decisions of multinational corporations.