Does FDI Promote the Suburbanization of Chinese Cities?Empirical Evidence from the DMSP/OLS Satellite Night Light Data

Liu Xiuyan, Ai Gang

Journal of Finance and Economics Vol. 42, Issue 06, pp. 52 - 62 (2016)  DOI:10.16538/j.cnki.jfe.2016.06.005

Abstract

Suburbanization is an inevitable phenomenon during urbanization process at home and abroad. More and more attention is also paid to suburbanization issue in China as urbanization carries on. Unfortunately, the role of FDI as an important driving force of urban renewal and new district development in configuration shape of urban space has been neglected by current literature. Based on the theoretical hypothesis of mono-centric city, this paper incorporates FDI into the analytical framework of suburbanization, constructs the suburbanization and sprawl indexes at municipal area level through global night light data, Landscan population distribution data&the vector data of administrative areas in China, and uses the panel data of municipal areas at prefecture level or above from 2003 to 2013 to test the effect of FDI on suburbanization. It arrives at the conclusions as follows:firstly, FDI is a key factor promoting suburbanization in China, and the level of suburbanization would increase by 0.1% respectively when the ratio of FDI to GDP improves by 1%; secondly, the promotion role of FDI in suburbanization varies with regions due to the unbalanced regional distribution of FDI; the introduction of foreign investments significantly stimulates the suburbanization development of East China, but does not have obvious effects on the suburbanization of West China and Central China. So local governments should pay additional attention to possible urban low-density sprawl resulting from FDI, and also views their own city development strategies.

Keywords

foreign direct investment; suburbanization; regional disparity; night light data