| Abstract: | Abstract. I assess the importance of geography and cultural ties in foreign direct investment in China. Using an estimated gravity model to construct predicted FDI stocks in China for 1997 from major source countries, I find that the total FDI stock would be lowered by about 45% if China's economic center were located in New Delhi, India, and would be lowered by about 70% if it were located in New Delhi and there were no cultural ties. These estimates suggest that much of China's ability to attract FDI is due to its natural advantages. |
