Study On The Effect Of FDI In Services Industry On Service Trade

Since the foreign direct investment developed around the world, the relationshipbetween FDI and economic development has been the focus of economists. With the trendof service economy is coming, the service industry development level affects one country’seconomic position on the international stage. When FDI in services flow into the serviceindustry, how does it affect China’s service industry? What effects will it bring into thedevelopment of China’s service trade in the long-term? Is there a necessary link betweenFDI and service trade? How does FDI in services affect service trade among differentindustries? These questions are this thesis trying to solve.This paper’s research method combines theoretical analysis and empirical analysis.From the results of empirical analysis, the FDI in services can promote china’s servicetrade import and export; raise the competitiveness of China Trade in Services in the longterm. From the results of empirical tests, services FDI have an impact on both quantity andquality of china’s service trade, which is distinct among different service industries. Finally,according to the results of theoretical and empirical analysis, the thesis puts forward thepolicy recommendations.This thesis’s innovation lies in the empirical research methods and perspectives. Inprevious studies, in the area of services FDI affects service trade competitiveness where isless empirical testing and analysis. In this paper, the revealed comparative advantage indexis the variable being explained, from an empirical perspective to make intuitive analysisand description. It is not sufficient to measure the impact of FDI on the China service tradethat use the service trade import and export quantity as the standard, because of the internaldevelopment of China’s service industry is unbalanced. This paper selects fourrepresentative industries to analysis, in order to clearly see the impact of FDI on thedifferent service industries, which has an important reference value for raise the effect ofusing the foreign investment to improve service industry.