The Research On The Influence Of Financial Development Level On FDI Attraction Based On Multi-threshold Model

Due to the unpredictability of the pattern of times,the location choice of foreign direct investment(FDI)has always been a hot issue concerned by many scholars.As financial development plays an increasingly important role in the economic development of various countries,the role of financial factors in promoting the inflow of FDI is also increasing.The financial factors of the host country begin to surpass the traditional factors of location choice and attract more and more attention of academic circles.In terms of function,financial development and FDI inflow are undoubtedly the forces that can promote economic growth,and they are interconnected and complementary together to form the indispensable backbone of the modern economic system.The acceleration development of economic integration have made the financial factors are increasingly prominent and interactive relationship of foreign capital,at present our country economic system is in the midst of the industrial structure adjustment and industrial transformation and upgrading of the critical moment,the introduction of foreign capital is still quite important,therefore the development of financial will impact on FDI inflows,if impact effect channel and how,And how other different factors affect the relationship between the two are of great research value.In this paper,the concept of financial development and foreign direct investment is clearly defined,and the mechanism of financial development influencing FDI is established by endogenous growth model(AK)based on the theories of FDI location choice and financial development.Then on this basis,through the selection and analysis of factors affecting financial development,the variables that can affect financial development on FDI attraction are selected to provide theoretical basis for the subsequent model construction.Finally,we use the panel data of 52 economies from 1997 to 2017 and the econometric technique of dynamic panel data threshold model with multiple threshold variables proposed by Ram’(?)rez-Rond’an(2018)to empirically test the theory.The results show that human capital and trade openness can enhance the attractiveness of FDI through their combined effect on financial development,and there is a "multivariable threshold effect".The two-threshold variable model passes the significance test of the three-zone system.That is,when the degree of trade openness is low,it is difficult for financial development to change the attraction to FDI by promoting the progress of human capital.In the zone system of "high labor quality and openness",the financial development is the most sensitive to the impact of FDI inflow,while in the zone system of "low labor quality and openness",the financial development is the least sensitive.Only in the zone system of "high labor quality and high openness",it shows inhibition effect,while the other two are promoting effect.Then it summarizes the above theoretical framework and empirical results and puts forward corresponding policy suggestions.The main contribution of this paper is to establish the mechanism and transmission mechanism of financial development on FDI,and take human capital and trade openness as two threshold variables to study the multi-threshold effect of financial development on FDI.The threshold model of dynamic panel data with multiple threshold variables increases the number of threshold variables in existing studies,which makes the research results more consistent with the actual situation and therefore more realistic.