Comparative Study On Economic Effect Of FDI Between Beijing And Shanghai

Beijing and Shanghai are two major cities in attracting FDI in China. Especially, after China's entry into WTO, the large inflow of FDI in the two cities has profound influence in the national economy, social development, and urban function and so on. With the development of global economy, cities like Beijing and Shanghai have ballooned to display their respective geographical advantages and improve investment environment, in order to attract more FDI. In the increasingly fierce competition situation, it has very important theoretical and realistic significance for doing comparative study of economic effect between Beijing and Shanghai.In this background, firstly, we summarize the current situation of FDI in Beijing and shanghai, including the amount, industrial structure, origin and regional distribution, and then compare their differences. Then we select the data from 1987 to 2009 about FDI in Beijing and Shanghai as sample, and establish economic growth model, total investment model and technological spillover model respectively, using Eviews6.0 statistical software, to do empirical analysis on economic growth effect, crowd out or crowd in effect and technological spillover effect of FDI in Beijing and Shanghai.At the end, we do comparative study of economic effect.From the study, we get the following conclusions:Firstly, FDI in Shanghai has a larger economic contribution to economic growth than that of Beijing. Secondly, FDI in Shanghai can crowd in domestic investment more obviously than Beijing. Thirdly, Technology spillover effects for domestic industrial enterprise in two cities are positive. Technology spillover effect of FDI in Shanghai is larger than that of Beijing. The main reasons for the results are as follows: Firstly, Shanghai has a larger amount of FDI than Beijing. The agglomeration of FDI in scale and quantity in an area can help exert its effect on economic growth to be better. Secondly, FDI in Shanghai mainly distributes in mature manufacturing which has closely industrial connection. It can bring more related industry and enterprise capital. Thirdly, the gap between foreign capital enterprise and domestic enterprises is larger in Shanghai than that of in Beijing. The demonstration effect and associated effect can work well.From empirical research results, we can conclude:the governments of the two cities should take investment strategy to strengthen industry policy guidance for foreign investment. According to the actual situation of different regions, governments should creat competitive market environment, to improve the domestic enterprises technological competitiveness. Shanghai government should make full use of advantages of manufacturing industry to develop related industries, strive for better position, strengthen technical training and supporting to domestic enterprise. Beijing government must make full use of advantages of service industry, set high technical threshold, attracting capital-intensive and technology-intensive FDI, thus increasing economic effects of FDI.