E-Government and Foreign Direct Investment: Evidence from Chinese Cities

Along with the rapid development of digital information technology, e-government is of great potential because it is a new form of conducting public administration and a way of demonstrating governmental innovation. The literature suggests that foreign direct investment (FDI) is increasingly associated with the continuing development of e-government in China. Using the Annual Census of Industrial Enterprises and e-government scores of government portals, this study examines the effects of e-government on FDI and how government subsidies mediate relationships between e-government and FDI. The results show that e-government positively affects FDI, and government subsidies have a positive effect on foreign enterprises’ investment efficiency by playing a mediating role between e-government efficiency and FDI. The findings make both theoretical and practical implications related to the role, provision, and acquisition of government subsidies; e-government systems and FDI; e-government scores and government efficiency; and firms maintaining focus on areas that are government priorities.