Study On The Correlation Between FDI And Industrial Structure Optimization And Upgrading Based On Chinese Data

Since China’s reform and opening up, lots of FDI flooding into China have promoted the development of economy and the upgrading of industrial structure. But since the mid90:s, with the transformation of China’s economy from the shortage economy to superfluous economy, although the promotion effect of foreign direct investment on our country economy remains strong, the optimization effect on Chinese industrial structure are weakening, along with its negative effects. At present, under the influence of economic globalization, it is critical time that we use foreign capital to promote economic development and adjust industrial structure, for our country is more closed to the external economy, and the degree of foreign investment’s influence on China’s economy is gradually enhancing. It is a major practical problem we are facing that how to avoid kill in the wave of globalization, use foreign capital to the fullest and minimize its negative impact. During the next National Twelfth Five-Year Plan period, China will speed up economic transition, promote the "mode transformation and structure adjustment "and make the stable and rapid economic development. To speed up the transformation, adjust the structure and adhere to the new path of industrialization with Chinese characteristics, we must foster the development of strategic emerging industries, accelerate the development of service industry and promote the coordinated development of the first second and tertiary industry. But after the financial crisis, the international investment environment is generally at the low level. So how to attract foreign direct investment to change our industry structure and how to use foreign capital rationally to develop strategic emerging industries are important problems which should be solved at present.According to the main line’theoretical explanation-the mechanism analysis of FDI and the upgrading of the industrial structure--the analysis of the adjustment of industrial structure--the empirical analysis of FDI and industrial structure optimization international experience", the paper has an accurate grasp of the situation based on the current China’s economic development. Combining the theory of International direct investment and the theory of industrial adjustment, this paper uses theoretical and empirical analysis and analyses the correlation of FDI and the optimization and upgrading of industrial structure systemically, and achieve certain results. In details, the main research contents include three parts:firstly, the mechanism analysis of FDI and the industrial structure optimization and upgrading. This part first describes the mechanism as a process of ’the influence factor of the industrial structure adjustment--the optimization of the industrial structure--various effects of optimization of the industrial structure acting--sustainable and rapid economic development’ on the basis of analyzing the industrial structure optimization and upgrading, and points out that the main content of industrial structure optimization is the height and rationalization of industrial structure. Secondly, construct the optimization and upgrading of industrial structure measure index. The industrial structure of demand determines the industrial structure of supply, and the national income is supported by industry supply and its structure. So there is one to one relationship between the upgrading of the industrial structure and economic growth, and the upgrading of the industrial structure can be measured by economic growth. Finally, the paper analyses the mechanism of how FDI affects the host country’s industrial structure optimization and upgrading from the aspects of correlation effect, transmission mechanism and etc, and considers the introduce of FDI to drive market competition and government guidance norms can be improved by the following aspects--the height, efficiency and rationalization to upgrade the industrial structure. Secondly, the empirical analysis of correlation between FDI and the optimization of our country’s industrial structure upgrading. In this part, with the help of the empirical measurement method such as unit root (ADF) test, vector autoregressive model (VAR), impulse response analysis, Co-integration test, vector error correction model (VEC) and Granger causes and consequences analysis and etc, the paper analyses the influence of China’s various industries of the actual use of foreign direct investment on China’s three industrial structure. At the same time, according to the empirical measurement index system of upgrading industrial structure, the paper analyses the relationship between the actual use of foreign direct investment and the upgrading of the industrial structure of our country. The study finds the foreign direct investment have different effects on the economic growth of different industries. The impact of FDI on industrial structure has a certain lag. FDI can effectively promote the optimization and upgrading of industrial structure. Thirdly, draw on the experience of ASEAN to make FDI to promote the optimization and upgrading of industrial structure. Due to the similar structure between ASEAN countries’ foreign capital and China’s foreign direct investment, in ASEAN countries, the proportion of foreign investment in second industries increases in1970s. Foreign direct investment scale in the tertiary industry increases in1990s. Therefore, this part mainly analyses and summarizes the successful experience of the ASEAN countries utilizing foreign capital to promote industrial structure optimization and upgrading. And through the review, it extracts practical experience to China.This paper makes the following exploration breakthrough on the basis of the existing research results. Firstly, it analyses the impact of foreign direct investment on our industrial structure deeply. Based on the qualitative analysis of foreign direct investment and current situation of China’s industrial structure, we establish empirical econometric model to analyze the impact of foreign direct investment on China’s industrial structure and draw some meaningful conclusions. Secondly, it analyses the impact of foreign direct investment on the optimization and upgrading of China’s industrial structure. This paper analyses the mechanism how FDI affects the optimization and upgrading industrial structure of the host country from the aspects of correlation effect, transmission mechanism and etc. At the same time, it combines the developing rule of one country’s industrial structure optimization affected by the financial crisis and China’s specific situation, constructs the measure index about the industrial structure optimization and upgrading and analyses the effect and mechanism of the FDI on the optimization and upgrading of industry of our country structure empirically. Thirdly, it puts forward innovative political proposals drawing on international experience. In this paper, based on the level of system construction, it gives the advice of the effectiveness of our foreign investment policy. And on this basis it draws a strategic transformation question about how to use foreign investment to promote the optimization of the industrial structure. So this study has certain innovation significance.This study finds that considering our current national conditions, FDI can directly promote the optimization and upgrading of China’s industrial structure and economic growth. In details, foreign direct investment promotes the upgrading of our industrial structure form labor and resource intensive industries to capital and technology intensive industries.Each industrial growth mainly benefits from the inertia of economic growth. The effects of foreign direct investment on the economic growth of the industries are different. The actual use of foreign direct investment in different industries has lagging effect on its industry, which means the use of foreign capital will promote the growth of the first and tertiary industries in the short term. While the pulling effect of foreign direct investment growth on the second industry needs a long period to realize. As for the ability of attracting foreign investment, the tertiary industry and secondary industries have better ability to attracting foreign investment. There are two-way Granger causalities between the upgrading of China’s industrial structure coefficient R and the actual utilization of foreign direct investment (FDI). The actual use of foreign direct investment in the short term has great influence on the optimization and upgrading of our industrial structure, while limited influence on the long term.