The Real Exchange Rate And Foreign Direct Investment: Metric Analysis And Attracting Strategy

This article mainly study the host country' strategy to absorb Foreign Direct Investment (FDI) to conduct the research, Combined RMB and current situation that China absorb FDI recently and make corresponding analysis。 This article put forward the corresponding policy recommendations on this basis。 First of all. I conducted a theoretical frame based on document foundation about the relationship among exchange rate and FDI. Moreover , This report do the exposition of a system on the choice theory of FDI investment country, while the host country is absorbing FDI, the relationship of its exchange rate and the competing country's exchange rate, how to influent their competitive strategy between them. As two countries' exchange rates are positively correlated, two countries' economies are both as substituted type economy. By using the advantage of other factors not including the exchange rate can win the competition even more., When two countries' exchange rate are negatively correlated, two countries are the complementary economy, Developing countries can regard exchange rate as the means of adjusting the foreign exchange market , create better condition and attract FDI., Secondly , take the relevant data of FDI from Japan to China as the sample with the exchange rate of RMB of year 1978-2003, Adopt OLS method, doing a empirical study to examine the effect of exchange rate to FDI。 And then join factors such as average salary , level of the retail price , population of host country ,etc. and make a empirical study to examine, It shows this paper proves exchange rate and FDI are significantly related. The following chapter choose Japan , U.S.A. , Singapore , China as samples。 First it make a dependence inspection to real effective exchange rate on 1978 - 2003 of four countries, Show the relation between four countries' exchange rate。 Regard Japan as investment country , make two comparative analysis separately on absorb FDI on China and U.S.A. as well as China and Singapore and relationship of exchange rate 。 Drawing an conclusion that we can use exchange rate as the regulating measure between China and the United States , but between China and Singapore compete in such aspects as industrial structure. Finally, put forward the policy recommendations based on the result of above empirical studies and comparatively analysis.