icular and how effective China has been in this effort.
FDI is placed in different parts of the world based on how the investor perceives the economic situation in those areas and on possible incentives which countries may use to attract the attention of such investors. Billington (1999) cites a number of key factors which could influence FDI location decisions. Billington cites the role of multinational enterprises (MNEs) in this process, noting that this role has become more important in the emerging global economy, probably because of recent changes which make multi-country markets seem more attractive. One important factor has been the arrival of deregulated markets and the ongoing reduction in international trade barriers, allowing MNEs to compete on more equal terms with foreign rivals. The development of new information technologies has also had two important effect: 1) it makes it possible for consumers to become more aware of the goods that foreign companies have to offer, allowing for the potential expansion in the size of the market served; and 2) it lowers the costs of producing and distributing to an enlarged market (Billington, 1999, 1).
The first of the factors influencing FDI location decisions is the demand for products of an MNE. If the existing markets are near saturation, the MNEs may be interested primarily in seeking out new markets, meaning they will take an interest in the size of the host market and its potential for development. If the host market can indicate that it has a potential for development and sufficient size for growth, this may make it more attractive. It is not easy for an MNE to ascertain the market size itself, but it is assumed that the larger the host area's total income may be, the greater the size of the potential market. This means that the total GDP of the area can be significant. Alternatively, the perception the MNE has of market size may be more closely related to the g...