【正文】 s in developing countries as determinants of foreign direct investment inflows. They employ both ordinary least squares as well as panel estimations. The expected rates of growth, the corporate tax rates, the degree of corruption and the degree of openness to foreign direct investment are all important determinants of foreign direct investment flows into these economies. Hines (1995) and Wei (1997) both examine the impact of institutional factors on foreign direct investment. By employing a corruption index, Hines shows that after 1977, . foreign direct investment grew faster in less corrupt countries. Wei (1997) uses OECD direct investment data and shows that both corruption and tax rates have negative effects on foreign direct investment flows. Wei’s estimations are crosssectional. The Empirical Model In this section we provide an empirical model to estimate the impact of China on the inward direct investment of various Asian economies. The economies we examine include Hong Kong, Singapore, Taiwan, the Republic of Korea, Thailand, Malaysia, Philippines and Indonesia.3 The years examined in this analysis are from 1985 to 2021. The strategy here is to control for all the standard explanatory variables of foreign direct investment in the Asian economies. But we add an additional variable representing the China factor. To proxy for the China Effect, we choose the level of the inflow of China’s foreign direct investment. Obviously Chinese inward foreign direct investment can also be dependent on the inward direct investment of these Asian economies as well as the standard explanatory variables. In order to capture such a reciprocal relationship between the inflow of FDI in China and that in other Asian economies, the FDI equation for both the Asian economies and China are estimated simultaneously. The basic regression model for inward foreign direct investment for Asian countries and for China are written as a linear specification of the following form: ln(AFDIi,t) = α0 + α1ln(CLNFDI,t) + β1ln(AGROWTHi,t) + β2ln(ACORRUPTi,t) + β3ln(ADUTYi,t) + β4ln(AGOVi,t) + β5ln(AWAGEi,t) 2 Other related literature includes Bao, Chang, Sachs and Woo (2021), Fung, Iizaka and Siu (2021), Zhang and Song (2021), etc. ) + βln(ATEL) + βln(AINCOME) + βln(OUTFLOW) +β6ln(AOPENi,t)+β7ln(AILLITi,t) + β8ln(ACPTAXi,t9i,t10i,t11t ln(CLNFDIt) = γ0 + δ1ln(AFDIi,t) + ρ1ln(CGROWTHt) + ρ2ln(CCORUPTt) ρ3ln(CDUTYt) + ρ4ln(CGOVt) + ρ5ln(CWAGEt) + ρ6ln(COPEN t) + ρ7ln(CINCOMEt) where the subscript “i” and “t” stands for country i at period t and the variables used in this analysis are defined below. AFDI i,t : the level of inward foreign direct investment in the ith Asian economies in year t. CLNFDI t : inward foreign direct investment into China in year t. AGROWTH i,t : growth rate of GDP of country i at time t. CGROWTH t : growth rate of GDP of China at time t. ACORRUPT i,t : an index of corruption of county i at time t. CCORRUPT t : an index of corruption of China at time t. ADUTYi,t : import duty of country i at time t. CDUTYt : import duty of China at time t. AWAGE i,t : average wage in manufacturing of country i at time t. CWAGE t : average wage in manufacturing of China at time t. AOPEN i,t : the share of exports and imports in GDP of country i at time t. COPEN t : the share of exports and imports in GDP of China at time t. AILLIT i,t : the percentage of people who are illiterate of country i at time t. 3 In future studies, we intend to include other Asian economies such as India and Pakistan. ATAX i,t : corporate tax rate of country i at time t. AGOV i,t : an index of government stability of country i at time t. CGOV t : an index of government stability of China at time t. ATEL i,t : number of telephone mainlines per 1,000 people of country i at time t. AINCOME i,t : per capita GDP of country i at time t. CINCOME t : per capita GDP of China at time t OUTFLOWt total outflows of direct investment to the world at time t The independent variables examined in the analysis are believed to exert an influence on inward foreign direct investment in each country of Asia and China by changing the investment environment through institutional and policy changes as well as the relevant economic conditions. The main variable that we shall examine in this paper is the proxy for the China effect CLNFDI. There are at least two aspects that we should consider here. First, in examining which lowwage export platform to locate, multinationals may choose between investing in China vs. investing in another Asian country, say Thailand. In this case, the multinationals will study the whole host of factors, includi