Author: Xianming Yang and Fan Yuan

Abstract: The relative difficulty of attracting foreign direct investment (FDI) to western China is often attributed to geography. However, this explanation becomes less tenable as the gap between FDI stocks in western and eastern China increases. This paper attempts to explain the situation from an industrial perspective by exploring the differences between the two regions. It also analyzes the effects of industrial development, structure, and linking capability. The results reveal that industrial factors are important to the inflow of FDI to western China.

Keywords: foreign direct investment, western China, development

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