China's Industrial Upgrading Effect Of Foreign Direct Investment Research

Since reform and opening up, domestic industrial structure was gradually upgradingwhile China’s Outward Foreign Direct Investment grew rapidly. Are there somethingrelated with both of seemingly different issues? During the past few decades whetherdid the development of China’s Outward Foreign Direct Investment promotedomestic industrial upgrading? Whether or how does the rapid development ofChina’s Outward Foreign Direct Investment play a positive role on domesticindustrial upgrading today? Especially in the back of global financial crisis, theglobal talents, enterprises and industries have changed greatly, and the distribution ofinternational production factors has also been changed tremendously. NowadaysChina’s enterprises have great developing opportunities to "going out". It has animportant practical significance to study affect of China’s Outward Foreign DirectInvestment on domestic industrial upgrading.In order to study the affect of Outward Foreign Direct Investment on domesticindustrial upgrading intensively, we must go into micro level of enterprises. Onlygoing into micro level can we make the macro-level study more convincing. Thisthesis studies the effect of China’s Outward Foreign Direct Investment on domesticindustrial upgrading through both macro and micro levels in order to explore thepromoting mechanism of Outward Foreign Direct Investment on domestic industrialupgrading.On macro level, considering development of China’s Outward Foreign DirectInvestment and domestic industrial upgrading, this thesis builds China’s CheneryModel to test the affect of Outward Foreign Direct Investment of the whole nation,eastern and western regions on industrial upgrading empirically. Results show thatsince1992the affect of China’s Outward Foreign Direct Investment on domesticindustrial upgrading was not significant, because the scale of China’s OutwardForeign Direct Investment was still small, investment motives were moreconcentrated on the market and resource-seeking, as well as China’s projectsengaged in overseas direct investment were not profitable or even lossed, et al.Ineastern area, Outward Foreign Direct Investment made a significant effect onpromoting its industrial upgrading, but differently among differente regions. Due tosmall scale of western region’s Outward Foreign Direct Investment, the affect ofwestern region’s Outward Foreign Direct Investment on industrial upgrading was also not significant.On micro level, this thesis defined industrial upgrading as process and productupgrading. Initially, it explores different affectting mechanisms of different kinds ofOutward Foreign Direct Investment on process and product upgrading fromtheoretical perspective. Then taking China’s manufacturing industry for example andintroducing dummy variable of Outward Foreign Direct Investment, it analyzeseffects of China’s57manufacturing enterprises on process upgrading empiricallythrough building cross-sectional data model. It concludes that Strategic AssetSeeking Outward Foreign Direct Investment has a significant effect on promotingprocess upgrading of enterprises. Finally, taking typical case of Haier Group’sOutward Foreign Direct Investment for example, it sdudies affectting mechanism ofHaier Group’s Outward Foreign Direct Investment on its product upgrading inmethod of case analysis.Through analysis from macro into micro level, this thesis makes valuableconclusion on effect of China’s Outward Foreign Direct Investment on domesticindustrial upgrading. It also provides useful evidences for government to developrelevant policies of Outward Foreign Direct Investment and industrial structure, aswell as for enterprises implementing the "going out" strategy to promote internalupgrading of process and product.