Regional effect of FDI inflow: Perspective from exchange rate fluctuation

This article establishes the econometric model to analyze the regional effect of FDI inflow from the perspective of the exchange rate fluctuation. In general, FDI is thought as the composite bundle of capital stock, know-how and technology. Based on the econometric analysis, it could be inferred that the fluctuation of RMB exchange rate has the impact on the regional effect of China´s FDI inflow besides the wealth and cost effect. The level of RMB REER show different effect on the inward FDI in different recipient area especially in Central China. Meanwhile the FDI inflow from different sources is also influenced by the RMB REER. Finally the policies regarding both exchange rate policy and FDI inflow utilization have been proposed.