TITLE:
Analysis of the Effect of CEPA on FDI to Mainland China from Hong Kong
AUTHORS:
Xiaoxiao Wang
KEYWORDS:
CEPA, FDI, Regional Economic Integration, Investment Effect
JOURNAL NAME:
Modern Economy,
Vol.7 No.4,
April
29,
2016
ABSTRACT: Regional economic integration has got great achievements both in practice and theory since 1980s, 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.