The Impact Of FDI On The Income Gap Between Urban And Rural Areas

With the continuous improvement of the level of opening up,China has actively introduced foreign capital,and the national economy has developed rapidly.While foreign direct investment is promoting China’s rapid economic growth,China is also faced with the problem of uneven development between urban and rural areas.More and more scholars begin to think about whether FDI has an impact on China’s domestic income distribution while promoting economic development,and recognize the importance of the issue of the impact of FDI on the income gap among urban and rural residents.Therefore,it is helpful to solve the problem of urban-rural income gap by studying the internal relationship and and seeking solutions.The Yangtze River Economic Belt accounts for more than half of the country’s foreign direct investment.It is not only an experimental zone for the development of China’s export-oriented economy,but also for regional integration and urban-rural integration.This paper takes the Yangtze River Economic Belt as an object to study the impact mechanism of foreign direct investment on urban-rural income gap.The results of the research are an extension at the national as well as provincial levels,and are of reference value in promoting the integrated development of the Yangtze River Economic Belt region and urban-rural integration,and in narrowing the urban-rural income gap,as well as being of foreseeable significance for the whole country.This paper investigates the impact of FDI in the Yangtze River Economic Zone on the urban-rural income gap and the related mechanisms of action,making research hypotheses based on theoretical analysis and analysis of the current situation.A panel data of 126 prefectural cities in the area from 2001 to 2020 was used.A fixed-effects model and a stepwise regression method,on the basis of which the regional heterogeneity of the upstream,mid-stream and downstream areas of the Yangtze River Economic Belt was examined and the mechanism of the effect of both was further examined.The main conclusions:First,the impact of FDI in the Yangtze River Economic Belt on the income gap between urban and rural residents shows a significant "inverted U-shaped" relationship,and the inflow of FDI plays a role in expanding and then narrowing the income gap between urban and rural residents;Second,in the upstream,middle and downstream regions,the inverted U-shaped relationship between the two is more remarkable in the upstream and downstream regions,while it is not obvious in the midstream regions.In addition,the role of human resources in the upstream and downstream regions is opposite,which may be related to the level of economic development.The impact of foreign trade level on urban-rural income gap is more significant in the mid-stream and downstream areas of the Yangtze River Economic Belt,which may be related to the coastal geographical location of the lower reaches and the radiation effect of the lower reaches on the middle reaches;Third,in terms of the impact mechanism,the intermediary effect model is used for empirical testing.It is found that the inflow of FDI can directly narrow the urban-rural income gap in the Yangtze River Economic Belt,and it can also indirectly narrow the urban-rural income gap by changing the industrial structure,foreign trade,technology spillover,and infrastructure construction.However,the indirect impact of the four transmission mechanisms is less than the direct impact of FDI on the urban-rural income gap.According to the above,Constructive and targeted countermeasure suggestions are made on how to utilize FDI in the Yangtze River Economic Zone and how to narrow the income gap between urban and rural residents and achieve integrated urban-rural development.Suggestions are made from four aspects: openness level,industrial structure,technological innovation and infrastructure level.