An Empirical Analysis Of Industrial Cluster's Effect On FDI Distribution In Yangtze Delta

Since the reform and opening-up, the scale of FDI in Yangtze Delta forms an important phenomenon in nation-wide. Currently, our industrial cluster is also mainly located in Yangtze Delta, Zhujiang Delta and Circum-Bohai-Sea Region. During 1990s, the industrial cluster induced by FDI in Yangtze Delta were mainly involved in certain industries such as the automobile, the auto parts, chemicals, electronics and instruments, which enabled the region to become the global processing and manufacturing center of equipment industries. For those IT industries which clustered due to FDI, the follow-up effect was obvious. Therefore, it is believed that the industrial cluster in Yangtze Delta exerted a significant effect on its large-scale foreign direct investment.According to the four mechanisms, namely the outside economical effect, scale economics effect, industrial linkage effect and the demonstration effect, eight variables are selected in the thesis, respectively infrastructure perfection, number of professional technicians, number of domestic industrials, output of domestic industrials, number of foreign industrials in previous year, output of foreign industrials in previous year, average salary of labor and the average DPI of citizens. By factor analysis, the eight variables are concluded into two factors, the industrial cluster factor and the market factor. The important role the industrial cluster factor plays in FDI distribution is testified by regression analysis and its extent of effect is also quantified. In the end, in view of the unbalanced FDI distribution in our country, several suggestions have been made to improve the situation.