Foreign Direct Investment And Agglomeration Relations

Since reformation and opening to the outside world, foreign direct investment (FDI) and regional industrial agglomeration have become more and more important in Ningbo industrial development. The attention is concentrated on the relationship between FDI and industrial agglomeration from the point of Ningbo district.The theme sums up the main theory of FDI and industrial agglomeration. It shows that FDI and industrial agglomeration have bidirectional influence to each other. The mechanism of FDI and industrial agglomeration shows that FDI will be in favor of the formation of industrial agglomeration, upgrading one regional industry structure, promoting international trade and technical scattered effects to improve the development of industrial agglomeration.Based on theoretical analysis, the article demonstrates the relationship between FDI and industrial agglomeration in industry and district terms. It brings forward different agglomeration index and establishes mathematical models with the actual data form Ningbo Administration for Industry & Commerce Bureau and Ningbo Foreign Trade & Economic Cooperation Bureau. The study shows there is a significant positive correlation between FDI and agglomeration. Then it chooses one typical industry—telecommunications equipment industry for proof-test by Co-integration and Granger Causality Test. And it indicates that two have bidirectional cause and effect relation. According to this, it can be concluded that Ningbo FDI and industrial agglomeration exists positive correlation in fact.Finally, the article makes relevant suggestions to FDI and local economy based on the study conclution.