Research On The Effect Of China’s Outward Foreign Direct Investment On The Optimization And Upgrading Of Industrial Structure

With the development of economic globalization, the international division of labor is deepening continuously, and the pattern of industrial structure is being optimized. Foreign direct investment plays a key role in our enhancement of world economic participation. Through the flow of production elements in the global scope, foreign direct investment promotes the development of our country’s economic transformation and changes the industrial structure so as to achieving the optimization and upgrading of industry as its final goal under the action of the progress of technology, industry association and resource complementarity,etc. Since China’s opening up, especially joining the WTO, China has achieved a rapid growth of foreign direct investment and a continued expanding scale. At present, China’s economic development in the period of transition and phase shift, China need to achieve the transformation and upgrading of industrial structure through foreign direct investment, which is important to improve China’s status in international labor division.This article, which starts from the positive effect of foreign direct investment on industrial structure optimization and upgrading of our country, analyzes the effect of industrial structure optimization and upgrading of China’s outward foreign direct investment by combining the theory with the national and regional development of the actual situation and using the annual data of 30 provinces from 2003 to 2013. The main research works are as follows:This paper defines the related concepts of foreign direct investment and the upgrading of the industrial structure, organizing the classic theories of foreign direct investment and industrial development.Also, according to the actual evolution and current situation of foreign direct investment and industrial structure evolution since China’s reform and opening up,this article analyzes the current development of China’s foreign direct investment and industrial structure fully.China has a large scale of outward foreign direct investment scale and wide distribution,however, there are a series of problems, such as the quality is not high, the traditional industry is too concentrated and the imbalance of regional development is serious; The industrial structure has been optimized, but the the internal structure of industry is unreasonable, the low level has become the shackles of development. Secondly, with actual development, we are able to analyze specific effects on China’s foreign direct investment promoting the optimization and upgrading of industrial structure from two aspects of industry and enterprise. Finally, this paper uses the empirical research of panel regression analysis method, which is to analysis the effect across the country as well as the East, Middle and West parts.The results show that the foreign direct investment has played a positive role on the industrial structure optimization upgrading.The coefficient is 0.002,which is very notable.Also, the domestic investment, the degree of marketization and the level of technology are important to upgrade the industrial structure.The effect in different regions are different. In Central China, foreign direct investment plays the most important role in promoting the optimization and upgrading of industrial structure. Second is in the west part and third is in the east part of China.According to the results of empirical analysis, combined with what mentioned above and the reality of our country development situation, This article puts forward policy suggestions on promoting the optimization and upgrading of industrial structure from three aspects, that is, the foreign direct investment strategy, the government function and the development of the enterprises. We need to constantly optimize the structure of foreign direct investment, expand the scale of investment and make reasonable choices of investment industry and location; The government should play its own norms and guiding roles effectively and reasonably to make our outward foreign direct investment effectively meet the needs of the development of China’s industrial structure; Enterprises need to increase their investment in research and development, establish clear investment objectives and accelerate their own reform to enhance the international status in order to enhance their competitive advantage and position in the international division of labor,etc.