Research On The Influence Of China’s Gradient OFDI On The Industrial Upgrading Of Home Country

Since the reform and opening up,China’s economy has achieved rapid growth.In 2019,China’s GDP exceeded 99.1 trillion yuan,ranking second in the world after the United States.China’s share of the global economy rose to 16%,and its contribution to world economic growth increased to 30%.The annual GDP growth rate was 6.9%.As a brown-eye economic connection channel that makes use of both domestic and international markets and resources,OFDI can inject new momentum into the transformation and upgrading of the national economy and provide a new carrier for the flexible flow of international factors.It is known as "the engine of economic take-off".The research on OFDI and the upgrading of home country’s industrial structure has been a hot topic in the international economic field.At present,China’s economic development has a series of problems such as overcapacity in some industries and unreasonable industrial structure.Based on the above realistic background and the theory of foreign investment and industrial transformation and upgrading,this paper discusses the influence mechanism of China’s direct investment on the upgrading of China’s industrial structure.Firstly,by sorting out relevant literature,the paper constructs the overall framework of China’s industrial upgrading by developing China’s gradient OFDI.Secondly,the internal mechanism of OFDI is expounded from the perspective of macro investment effect and medium investment motivation,and the influence mechanism of OFDI on the home country industry is discussed.This paper summarizes that China’s clockwise OFDI of foreign developing countries mainly promotes the industrial upgrading of its home country through two chains: marginal industrial transfer and allocation of r&d costs of enterprises.(1)China’s clockwise OFDI → flow of domestic production factors → optimal allocation of resources → industrial upgrading;(2)China follows gradient OFDI → obtain cheap resources→reduce production cost→increase r&d investment→promote technological progress→develop emerging industries→industrial.Thirdly,based on the inter-provincial panel data from 2004 to 2017,the correlation between China’s clockwise gradient OFDI and the upgrading and rationalization of the industrial structure of the home country is analyzed.The industrial upgrading was specifically decomposed into the industrial structure rationalization index(TL)and industrial structure elevation index(TS),and the spatial durbin regression model was adopted to empirically study the influence of descending gradient OFDI on the industrial upgrading from the national,regional and different time periods.This paper draws the following research conclusions: first,the theoretical mechanism analysis shows that China’s OFDI to developing countries promotes industrial upgrading through marginal industry transfer and allocation of r&d costs of domestic enterprises.Through the transfer of domestic sunset industries that do not have comparative advantages,release factors of production and resources,promote the flow of labor to other industries,the flow of factors of production causes the adjustment of industrial structure,promote industrial upgrading;Second,empirical regression results show that: on the whole,China’s ofdi is conducive to the optimization of industrial structure and the improvement of industrial efficiency,promoting the development of China’s industrial structure toward the "three,two and one" high-level direction,and the proportion of the service industry in the national economy is rising.Third,the potential of China’s gradient OFDI needs to be further explored.The investment area is concentrated in the energy industry,and the investment potential needs to be further deepened.In addition,the investment enterprises of China’s shungradient OFDI are mainly state-owned enterprises and central enterprises,with a single investment subject,while the investment fields are mainly concentrated in the energy industry and narrow.Fourth,the impact of China’s gradient OFDI on industrial upgrading is becoming prominent.Based on the research in this paper,this paper believes that China should continue to expand the efficiency-seeking model in China’s gradient OFDI and make investment policies that match the economic development level of the host country according to local conditions.The government should encourage and guide enterprises to continue to expand their direct investment in developing countries,and encourage and guide enterprises of multiple ownership to actively participate in the construction of China’s gradient OFDI economy.