Research On The Interactive Mechanism Of China’s Outward Foreign Direct Investment And Industrial Upgrading

At present, the tension of economic globalization sustains to go, so becomes themain trend of world economy in the21st century, and the production factors areflowing at a faster rate in the global scope in order to achieve the optimal allocationof resources in the world. Industry globalization is the core of economic globalization,in an open economy system, industrial upgrading could be achieved through theinternational shift of resources and factors. Foreign direct investment wouldcontribute to the cross-border shift of all kinds of production factors and optimizingthe allocation of resources, developing China’s dynamic comparative advantage andeconomic growth potential, so prove to be an important and effective way to promotenational industrial structure upgrading. Therefore, this paper researches on theinteractive mechanism of outward foreign direct investment and industrial upgradingat exactly the right time; it not only has abundant practical material as references, butalso helps summarize and sublimate the economics theory.Based on the relationship theory between foreign direct investment andindustrial upgrading, dissipative structure theory and synergetics principles, this paperintends to reveal the interactive mechanism of foreign direct investment and industrialupgrading in a unified theory framework, guide the developing countries representedby China carry out foreign direct investment activities according to their economicdeveloping needs in a step-by-step and focused manner, dirve the domestic industrialupgrading and continuous, stable, healthy economic growth; in the avove processgradually achieve the positive interaction between foreign direct investment andindustrial upgrading. Meanwhile, the theoretical innovation and the scientific rigorousmathematical argument based on the data from economic realities are indispensable.The synergic development model of China’s outward foreign direct investment andindustrial upgrading and the actual states of the domestic economy performance areverified each other. The theoretical idea highly condensed and the practice full ofvariety is an inherent unity. So it should follow the evolution law and mechanism ofinteractive activity between outward foreign ditect investment and industrialupgrading, summarize the various factors affecting the positive interaction between the two at this stage, and propose institutional arrangements and policy designreasonably and effectively. Summarized from practice and be used in practice, andresearch findings are put into practice, proved and effective is another key target ofthe research. This paper is divided into nine chapters, as follows:Chapter I: Introduction. Briefly introduce the research background, purpose andsignificance, review related domestic and foreign research literatures, and thenconfirm the contents, methods and technology roadmap. At last put forward thepossible innovation points.Chapter II: Theoretical foundations of the research. Combine the relationshiptheories of foreign direct investment and industrial upgrading; systematicallyexpound dissipative structure theory and synergetics principle, and define the relatedconcepts. So lay a good foundation for the further research of the paper.Chapter III: Analysis on the present situation of outward foreign directinvestment and industrial upgrading of China. The paper analyzes the status quo ofChina’s foreign direct investment from the four major aspects including the size,industry distribution, geographical distribution, and the distribution of investmententities; make a reasonable judgment on the OFDI stage of China based onInvestment Development Phase Theory, and summarize the basic characteristics ofdifferent stages. The paper describes the evolution progress and development status ofChina’s industrial structure after Reform and Opening Up, and finds a high degree ofcoincidence of the evolution progress of OFDI and industrial upgrading.Chapter IV: Construction of the theoretical framework of interactive mechanismChina’s foreign direct investment and industrial upgrading. Establish the Brusselsmodel on the interactive evolution of outward foreign direct investment and industrialupgrading; put forward the synergic development mode of positive interactionbetween the two, explore the core contents, transmission channels and functionmechanism of the synergic development, and examine the various interactivities andmutual influences of outward foreign direct investment and domestic industrialupgrading.Chapter V: Overall evaluation on the synergic evolution of the China’s foreigndirect investment and industrial upgrading. Utilize the gray relation entropy flowmodel to test the synergic development level of outward foreign direct investment and industrial upgrading; identify several handicaps affecting the synergic developmentprocess by means of the panel data model so as to reasonably explain the positiveentropy flow and tiny negative entropy flow from the grew relation entropy flowmodel.Chapter VI: Dynamic correlationship analysis on interactive circumstances ofChina’s foreign direct investment and industrial upgrading. Use econometric analysismethods such as vector autoregression model, cointegration test, Granger causalitytest, impulse response analysis and variance decomposition to meticulouslycharacterize interactive behaviors between outward foreign direct investment andindustrial upgrading, and combine the short-term effects description and long-runequilibrium analysis.Chapter VII: Simulation and regulation on interactive behaviors of China’sforeign direct investment and industrial upgrading. Create a system dynamics modelto do simulation, trend forecasting and policy regulaiton on the basic interactivebehavior of outward foreign direct investment and industrial upgrading under thesynergic development mode in a plastic system to search for the optimal solution.Chapter VIII: Suggestions on promoting the positive interaction of China’sforeign direct investment and industrial upgrading. By summarize relevantexperiences on the correlaiton’s development of outward foreign direct investmentand industrial upgrading from three typical countries including the United States,Japan and South Korea, provide some inspirations and on this basis take up thecountermeasure design for the positive interaction and synergic development ofChina’s foreign direct investment and industrial upgrading.Chapter IX: Conclusions and Outlook. Summarize the main conclusions of thefull text, analyze the existing deficiencies in this paper, and point out the direction tothe further research.The main innovation points of this paper:(1) put forward synergic developmentmodel of outward foreign direct investment and industrial upgrading, interpret thesynergy mechanism between the two, and form a systematic, complete, newtheoretical framework;(2) Based on the logic thought “The status quo analysis (OLSand statistic indexes)→The overall evaluation (grey correlation entropy flow model)→The dynamic considerations (VAR model)→The simulation regulation and control (SD model)”, this paper designs the empirical test path, and verify the degreeof coincidence between the domestic economic reality and the theoretical expectation;(3) Select a variety of evaluation indicators, and utilize a variety of empirical methodsto analyze the same research topic, and thus obtain the roughly constant and moreconvincing conclusions;(4) By summarizing and absorbing the beneficial experiencesof typical countries, closely contact with the reality of our country, pay specialattention to avoid the interferences from obstacle factors, carry on the policysimulation optimization, and map out the effective public policies that would be favorof the collaborative interactions between outward foreign direct investment anddomestic industrial upgrading, so these measures would be in line with the strategicrequirement of the open economic new system.