Research On The Impact Mechanism Of Foreign Direct Investment On The Transition Of Economic Development

Since the last mid-century, international economic cooperation and competition withforeign direct investment and international trade as the main forms has continuouslydeepened the development.The “2013World Investment Report” showed that the globalforeign direct investment reached$1.35trillion in2012and UNCTAD relevant informationshowed that the2014global FDI flows reached$1.6trillion and will attain$1.8trillion in2015. During the reform and opening up for over30years, China’s total foreign directinvestment has exceeded one trillion U.S. dollars. Since1993, China’s foreign directinvestment (FDI) has been ranking the first among developing countries, which reached$116billion in2011and was only second to USA in the world. In2013, the actuallyutilized foreign investment achieved$117.586billion. As China’s capital, Beijing walks inthe forefront of the country in the use of FDI, with the actual foreign direct investmentattaining$8.52billion in2013. Meanwhile, FDI played a positive role in promoting thehigh degree of industrial structure. In2013,the added value of the tertiary industryaccounted for76.9percent of GDP in Beijing. However, it must be noted that comparedwith developed economies and world cities, there still exists a big gap in the quality andlevel of Beijing’s economic development,which is still in the lower-end position in theglobal value chain.The “hollowing out” of the manufacturing sector and the lower-endservice industry co-exist, and the industrial development pattern with technology andinnovation as the main driving force has not yet taken shape. Meanwhile, the contradictionbetween Beijing’s economic development and its population, resources and environmentbearing capacity has become increasingly severe. Therefore, Beijing urgently needs to walkahead in the national strategy to achieve the transformation of economic development mode.Among which, upgrading the quality of FDI is an important driving force and necessarychannel to boost the transformation of the economic development mode.Aiming at related scientific issues of the role of FDI in the transformation of economicdevelopment mode in Beijing, on the basis of large-scale data analysis and extensiveliterature research and through repeated discussions with government managers, expertsand scholars in professional fields, this paper has comprehensively utilized qualitative andquantitative analysis methods for systematic study. Firstly, this paper has combed andanalyzed the literature on foreign direct investment, transformation of economicdevelopment pattern and the relationship between the two, as well as described the progressand theoretical contributions of the literature research. Secondly, this paper has conducted an in-depth analysis of the evolution of Beijing’s foreign direct investment, elaborated thestage characteristics of FDI in Beijing, and parsed the role of policy guidance, whilepointing out the positive role and inadequacies of FDI in boosting the transformation ofeconomic development mode in Beijing. Thirdly, this paper has theoretically screened theinfluencing factors of FDI on the transformation of economic development mode, andstudied the mechanism of action of FDI on each influencing factor detail by detail. Then,through the establishment of mathematical models and other statistical research methods,this paper has conducted the empirical analysis of the role of foreign direct investment inthe transformation of economic development mode in Beijing. Finally, according toempirical findings, this paper has proposed policy recommendations on enhancing the roleof FDI on accelerating the transformation of economic development mode in Beijing.The main innovation of this paper is as follows:(1)This paper systematically reveals the influence mechanism of FDI on thetransformation of regional economic development mode and establishes the specificassessment indicator system. Based on the literature study, this paper comprehensivelyutilizes the industrial economic theory, regional economic theory and foreign investmenttheory to propose the assessment indicator system of the impact of FDI on thetransformation of Beijing’s economic development mode, specifically identifies theassessment indictors in five aspects,namely technological innovation, industrialrestructuring, strategic emerging industries, industrial energy conservation&emissionreduction and regional economic development, and makesan in-depth analysis of thespecific influence mechanism oneachassessment indicator, thus systematically revealing theinfluence mechanism of FDI on the transformation of Beijing’s economic developmentmode.(2)This paper effectively combines Cobb-Douglas production function withco-integration model, and constructsa relevance model between growth rate of FDI andindustrial transformation index. While conductingtheempirical analysis of the impact ofFDI on strategic emerging industries, we construct a model about the relationship betweencomprehensive technology level and FDI in the imitation of Cobb-Douglas productionfunction and add twonew variables of domestic demand and policy. This paper enriches theexisting theoretical models in empirical aspect and provides a more reasonable basis formeasuring the impact of factors on strategic emerging industries in practice. In addition,duringthe empirical analysis of the impact of FDI on the industrial structure, weestablish a model on calculating the degree of industrial transformation. Based on thatmodel, we also construct a correlation model between FDI growth rate and industrialtransformation indicators. After comparing FDI with the degree of industrial transformation,this paper not only determines the lag time, but alsoconducts the correlation analysisbetween the two, which is a new attempt.(3) Through the excavation and analysis of Beijing’s FDI data and information, thispaper systematically reveals the phased evolution characteristics of Beijing’s FDI. Based onthe theory of foreign investment development stage, combined with major events in theeconomic development and foreign trade and economic cooperation during China’s reformand opening up, this paper explicitly divides Beijing’s FDI from1978to2013into threestages, and conducts a quantitative test. Meanwhile, we summarize the policy evolutionprocess of attracting FDI in various stages and its role. In addition, this paper clearly pointsout that Beijing’s economic development and reconstruction of the industrial system willalso change in the future, which will certainly bring Beijing’s FDI into a new phase ofcomprehensive development in both quality and quantity.(4)In light of Beijing’s urban function orientation and regional economic features, thispaper proposes the new positioning and policy recommendations of FDI in Beijing’seconomic development. And in consideration of Beijing as an ultra large international citywhich will form the characteristics of internal regional function division, this paperrespectively studies the impact of FDI on the function core area, urban functiondevelopment area, urban development new area and ecological conservation area in Beijing,and proposes the policy recommendations onintegratingthe positioning of Beijing’s internalfunctional areas to form the regional characteristic pattern of FDI.In short, FDI has played an important role in promoting the transformation of Beijing’seconomic development mode. Therefore, developing a more proactive and effective policyon utilizing foreign direct investment will play a more effective role in promoting thetransformation of economic development mode.