The Spillover Effect Of FDI In The Regional Perspective On Industry

How to explain the rapid economic growth in China over the past three decades is an important topic in the academic, therefore, many scholars consider the country as a whole as to launch many studies. However, because of obvious regional heterogeneity, the nationwide studies often ignore the special nature of the regional level or provincial level; On the other hand, the reasons of China’s high-speed economic growth are multi-faceted, such as the internal market-oriented reforms, FDI, joining the WTO and other factors. Based on the above considerations, this paper attempts to study a small entry point. This paper attempts to analyze1998-2007detailed and comprehensive industrial enterprise databases’micro enterprise data of Jiangsu and Zhejiang province. This paper estimate the mechanism and spillover effects of foreign direct investment (FDI) on the enterprise’s TFP of Jiangsu and Zhejiang provinces.This study finds that FDI of Jiangsu and Zhejiang have positive backward spillover, while the forward spillover effect is not significant. Jiangsu also enjoys the positive horizontal spillovers of FDI; however, in Zhejiang Province it was not significant. Further, this paper attempts to combine the changes of industrial structure in Jiangsu and Zhejiang and distribution of FDI in the industry chain to explain the fact that we find. This paper argues that the transformation of the industrial structure as well as industry distribution of FDI have a effect on the spillover of FDI. Subsequently, with the lag examination and sub-regional, sub-industry regression method we further confirms the reliability of the logic. We believe that the above logic appropriately explained the differences in growth rate and quality of Jiangsu and Zhejiang provinces in recent years. The same time, the discovery has certain reference significance on China’s opening up policy adjustment and industrial restructuring.