A Study Of Interactive Relation Between FDI And Chinese Regional Industrial Structure

Since the reform and openness, China has already become the hot area of foreign direct investment (FDI). It became the second destination for FDI in the world in 1995 after USA. FDI has greatly impacted China's economic development, especially the regional industrial structure. Meantime, with the FDI inflows and economic development, Zhujiang triangle area which FDI is concentrated on, has been losing its advantages in natural resources, factors of production and corresponding industrial structure which attracted FDI in the beginning. It results in that FDI transfer toward Yangtze triangle region and the central and western region from Zhujiang triangle region.We study on the interactive relation between FDI and Chinese regional industrial structure. Firstly, we analyze the theory of the interactive relation between FDI and regional industrial structure .We introduce the concept of regional industrial structure .We analyze that FDI promotes the optimizing of regional industrial structure and discuss that regional industrial structure plays an important role in location choice of FDI. We analyze the relevant theory of interactive mechanism between FDI and the regional industrial structure. Secondly, we measure the industrial mix effect which stands for the regional industrial structure by utilizing Shift-Share Analysis, and construct regression models between FDI and the regional industrial structure to analyze the interactive relation between them. We can draw the conclusion that there is evident positive correlation between FDI and the regional industrial structure. Subsequently, we measure the comparative advantage index and the industrial structure advantage index by utilizing Industrial Structure Advantage Analysis. We conduct empirical study on correlation between FDI and the regional industrial structure based on Panel Data. We illustrate that the regional industrial structure exert great influence on the location choice of FDI from the dynamic angle, and reveal that the change of regional industrial structure is the important reason of spatial transference of FDI in the deep level. At last, we put forward the suggestion of policy from the two directions that FDI promotes the adjustment of industrial structure and that different regions attract FDI, including the suggestions of strengthening control of the guidance for FDI industry and how different regions make use of own industrial structure and adjust it to attract FDI. Thus the policy suggestions have the very strong guiding sense to the practice.The regional industrial structure is the core of spatial allocation of resources .FDI leads factors of production to transfer among regions, accelerating the transfer of the regional industrial structure. Meantime, the change of the regional industrial structure results in the spatial transference of FDI, definitely leading to the change of the regional industrial structure on a new leap. We draw the conclusion that FDI and the regional industrial structure are complementary and interactive from the two directions of study on interactive relation between FDI and the regional industrial structure. The two directions of research are that FDI exerts influence on the regional industrial structure and that the regional industrial structure plays a great role in the spatial transference of FDI. We conduct the study, which not only helps central government to enact suitable policy of attracting FDI to promote optimizing of the industrial structure, but also helps local governments to make use of own industrial structure advantage to attract FDI to reach the purpose of the regional industrial structure heightening and development of the regional economy. At last, it will help us to fulfill beneficial cycle between the FDI and the regional industrial structure.