Regional competitiveness for attracting and retaining foreign direct investment: A configurational analysis of Chinese provinces

This study examines the entry and exit of multinational enterprises (MNE) across regions in China. We explore the configurations of regional economic and institutional factors that attract and retain MNEs. We analyse the strategic entry and exit of MNEs in 31 Chinese provinces during 2001-2007. Our fuzzy-set qualitative comparative analysis (fsQCA) reveals multiple regional competitiveness profiles, as configurations of economic and institutional conditions, that are associated with a large scale of MNE entries and/or exits. In general, our findings suggest that it is the collective influence of Porter’s (1990) diamond factors, rather than individual conditions, that contributes to the attractiveness of a regional market to foreign investors. Specifically, we find that while MNEs tend to exit regions with deficiencies in economic conditions, they are attracted to regions with favourable economic conditions and low state intervention, which also results in heightened market competition that results in restructuring of foreign investors.