Digital Government Construction And FDI

After the international financial crisis in 2008,the motivation and temporal distribution of foreign direct investment have undergone great changes,with sole proprietorship and vertical foreign enterprises gradually shifting to joint ventures and horizontal ones.The great changes in the international and domestic stage have made it an important task to attract high-quality foreign investment and develop China’s economy with high speed and quality.The Fifth Plenary Session of the 19 th Central Committee set building an open economy at a higher level as the target plan for China’s future economy,and optimizing the business environment is the focus of opening up to the outside world.To improve the level of government digital construction can provide more convenient opportunities for the entry of foreign enterprises to some extent.The optimization of regional location conditions can have an important impact on attracting foreign investment.This paper collects and collates the digital government construction performance scores of 240prefecture-level cities in China from 2011 to 2017 from Guomai E-Government network,and constructs panel data model for multiple linear regression.According to the regression results and coefficient,this paper analyzes the relationship between the level of city’s digital government construction a the development of foreign direct investment.The empirical study finds that digital government construction has a significant promoting effect on foreign direct investment in China,which is reflected in that every1% increase of digital government construction,the scale of foreign direct investment attracted by local governments increases by 0.325%.In order to ensure the robustness of regression results,this paper tests the robustness of the model by changing the indicators of explanatory variables and explained variables,processing samples and adding more control variables,and finally gets the conclusion that the regression results of the model are robust.Secondly,this paper adopts the method of instrumental variables to deal with endogenous problems of the model.Finally,through multi-dimensional heterogeneity analysis,the research finds that digital government construction has heterogeneity on FDI in terms of city location,city size,human capital level and information infrastructure construction.This paper discusses the mechanism between digital government and foreign direct investment.Improving the level of digital construction of local government can reduce information asymmetry and restrain government corruption,which can enhance government transparency and thus enhance regional advantages.At the same time,the construction of digital government can shorten the start-up process of enterprises,reduce the transaction costs of enterprises and finally improve the city’s attraction to foreign investment,so as to promote foreign direct investment.The findings of this paper,in terms of theoretical mechanism and empirical results,provide empirical guidance for cities to improve their location advantages so as to attract investment into a new stage as well as promote the development of city economy and deepen the opening-up development.