Research On The Impact Of Urban Agglomeration On Foreign Direct Investment

Urban agglomeration has become the main form of promoting urbanization in China,and plays an important role in solving the problems of regional development.The 13 th Five-Year Plan Outline of the National Economic and Social Development of the People’s Republic of China proposes to build 19 urban agglomerations nationwide.The implementation of urban agglomeration policies can promote the interactive development within and between urban agglomerations,and can open up all links of production and consumption to promote the flow of factors.The formation of agglomeration economy and industrial agglomeration phenomenon is conducive to the development of economies of scale.With the prominent economic effect of urban agglomeration,the development of urban agglomeration has positive significance in promoting local economic growth,industrial upgrading and increasing employment,and has gradually become a new economic growth pole.On the other hand,with the weakening of China’s comparative advantages in labor costs and other aspects and the increase of economic uncertainty,foreign capital flight is serious.According to the Statistics Bulletin of National Economic and Social Development,the number of newly established foreign-funded enterprises in 2020 alone decreased by 5.7% compared with the previous year.In the case of foreign capital flight,foreign investment has gathered in urban agglomeration,for example,the Yangtze River Delta urban agglomeration,whose land area only accounts for 3.73%,but the amount of foreign direct investment accounts for 39% of the national total.Therefore,it is of great significance to study whether the implementation of urban agglomeration policy is the cause of foreign capital agglomerationBased on this,this thesis,on the basis of summarizing the classic literature at home and abroad,collates the panel data of 285 prefecture-level cities from 2006 to 2019,conducts a parallel trend test,uses the double difference method to study the impact of urban agglomeration policies on the location selection of foreign direct investment,and uses the intermediary effect model to study the mechanism of the role of urban agglomeration policies on foreign direct investment,This thesis studies the “foreign capital transfer” effect and “foreign capital creation” effect of urban agglomeration on foreign direct investment by using spatial double difference and spatial Dubin model.The research results are as follows:(1)The urban agglomeration strategy has a significant promoting effect on FDI,which is still valid after replacing similar explained variables,excluding other competitive policies,dealing with sample selection errors and regression of instrumental variables,and the regression results are stable;(2)The urban agglomeration policy will affect the location choice of FDI through agglomeration economic effect,industrial linkage effect and market integration effect;(3)The policy effects of urban agglomerations with different development stages,different regions and different spatial structures are different;(4)The urban agglomeration policy has a "foreign capital creation” effect in the short term and a " foreign capital transfer” effect on the surrounding cities in the long term;(5)The urban agglomeration policy helps to improve the quality of foreign capital utilization.Finally,in response to the above research conclusions,this article proposes policy recommendations on how to utilize the agglomeration economic effect,industrial agglomeration effect,and market integration effect to enhance the ability of cities to attract foreign investment,as well as how to resolve the coordination problem of urban agglomerations in attracting foreign investment.