Research On The Marketization On China's Attraction Of Foreign Direction Investment

Since the reform and opening up,the inflow of foreign direct investment in China has shown a trend of increasing year by year.By the end of 2017,China has become the world's second largest economy attracting foreign direct investment.However,with the rapid growth of foreign direct investment in China,the regional distribution is extremely uneven.The proportion of foreign direct investment in China's coastal areas is as high as 80%,while that in inland areas is less than 20%,showing a trend of "more in the east and less in the west".At the same time,China's marketization process continues to deepen,the market mechanism in economic activities began to strengthen the role of more active market players,to create a free competition in the market environment,the improvement of marketization to attract foreign direct investment plays a role that can not be underestimated.The inflow of foreign direct investment can not only create jobs for our country,but also bring advanced professional technology and management experience.The most important is that foreign direct investment can promote the growth of our economy.Based on this,this paper based on the current situation of FDI and marketization level,adopts the method of combining theoretical analysis and empirical analysis to study the influence of marketization level on FDI,in order to find new impetus to attract FDI.In the theoretical research,this paper firstly sorts out and summarizes the eclectic theory of international production of Dunning,a British scholar.The eclectic theory of international production is the earliest comprehensive theory of foreign direct investment.According to this theory,the factors affecting FDI can be summarized as ownership advantages,location advantages and internalization advantages.Only when an enterprise has these three conditions at the same time,FDI activities are likely to happen.Based on the location advantage theory in Dunning's eclectic theory of international production,this paper analyzes the influence mechanism of marketization level on foreign direct investment.The deepening of marketization can promote the inflow of foreign direct investment mainly through the following four ways: firstly,improving the efficiency of resource allocation and reducing the operating cost of enterprises;Secondly,to create a fair competition environment,reduce the risk of enterprise investment;Thirdly,to create a market environment in line with the international standards,and enhance the adaptability of enterprises,which is conducive to the development of potential markets;Fourthly,the system environment is more optimized,so that the operation of enterprises efficient and convenient.In the empirical study,this paper selected 30 provinces in mainland China domain(Tibet was taken out because of the data is not complete)2003-2016 panel data,by constructing econometric model,the foreign direct investment is as explained variable,marketization level as the core variable,and the technical innovation level,degree of fiscal decentralization,opening to the outside world,infrastructure construction,r&d investment and labor resources such as join model as control variables,using the panel data of least squares regression was carried out on the model,the marketization level and the relationship between foreign direct investment.The research results show that the improvement of marketization level in China has a significant promoting effect on foreign direct investment not only at the national level,but also in China's coastal areas and inland areas.In addition,the level of technological innovation,infrastructure construction,investment in research and development,fiscal decentralization,degree of opening-up and labor resources are all positively correlated with FDI.Finally,according to the research results,this paper puts forward several policy suggestions.First,to create a fair market environment for competition,improve the environment for the development of private economy,and further improve the level of marketization.Second,it is committed to promoting the effective allocation of factors of production,reducing the distortion of factor market,and thus improving the marketization level.Third,reduce the intervention and control actions of governments at all levels and give the market enough freedom.Finally,it is necessary to balance the development degree of China's regional marketization,especially to improve the marketization level of China's inland areas,so as to balance the inter-regional attraction of foreign direct investment.