Agglomeration,Backward And Forward Likages:Evidence From Fdi In China

FDI(Foreign Direct Investment) is always a hot topic since the reform and opening up.As FDI increased exponentially, the agglomeration of FDI attracted numbers of scholar’s attention. A study on the linkages between agglomeration and FDI location choice will contribute to a better guide to foreign investment and achieve the purpose of our industrial transfer promoting the balanced development of the eastern, central and western.Communications equipment, computers and other electronic equipment manufacturing as a start, adopting the data of the preferred industry from28provinces (municipalities) between2007-2010,we study the agglomeration,backward and forward linkages and FDI location choice.The result is that the agglomeration has an important implications to FDI location choice;backward linkages deeply influence the location choice of foreign invested preferred industry, that means the upstream enterprises has a deep influence on this industry; while the downstream enterprises influence the industry as well, but the effect is nagtive; others effects for the degree of openness has influence on FDI location,while human capital and market potential is opposite.Based on these conclusions, the paper suggests that the upstream enterprises and the middle-stream enterprises have a close contact, so creating a good investment environment,the government encourages the transfer of the preferred industry to the central and western regions, has great significance. In the process of industry-transfer,we should pay attention to the transfer as a whole that means we will focus on the upstream enterprises surrounding the communications equipment,computers and other electronic equipment manufacturing, better upstream enterprises stronger the middle-enterprises in Communications equipment, computers and other electronic equipment industry. Finally, the technological innovation capability of the central and western regions should be enhanced, the investment of human capital should be increased as human capital takes an important role to FDI in the preferred industry. Opening as a traditional factor takes place, as the middle does a well job in current surrounding, we are optimistic about the Communications equipment, computers and other electronic equipment manufacturing in the Middile.