Location Choice And Economic Growth Effects Of Foreign Direct Investment In China's Yangtze River Delta Region

With the increasing globalization of economic activity from between 1970's and 1980's, international direct investment grows rapidly. In the light of history lessons and the whole world scenario, the main issue now to China is not whether to accept FDI but what types FDI should be acceptted and how to take good use of it. From 21 century, the Yangtze Delta Region has become the most important region in China that fetches FDI. To study FDI's location determinants and economic growth effects in this region has great significance for the Yangtze Delta Region itself and the whole country.After textual researching for FDI's location determinant theory and FDI's economic growth effect theory in host developing countries and consulting relative studies for the Yangtze Delta Region, this paper mainly adopts John.H.Dunning's OLI model and compromises the viewpoints of developmentalism, economic nationalism and endogenous growth theory and applies panel data method to analyze FDI's location determinants and economic growth effects in the Yangtze Delta Region. First, this paper researches FDI' space-time distribution changing trend in the Yangtze Delta Region. Secondly, from industry agglomeration theory visual angle, this paper constructs FDI's location determinant model based on hypo-nation layer to analyze FDI's location choice in the region. Thirdly, study FDI's economic growth effects from aspects of its capital shaping effect, direct economic growth effect, productivity spillover effect and foreign trade effect, etc. And also extend the study from the aspect of FDI's employment effect and urbanization effect in the Yangtze Delta Region. Finally, according to the reach findings, this paper provides some policy implications and strategic thinking.The main findings are as follows. First, from the mid-1980s, proportions of the FDI taken use of by the Yangtze Delta and the Pearl River Delta of the total amount FDI taken use of by the whole country emerge posture of while one increasing, the other decreasing. FDI's location distribution changing among the sixteen cities in the Yangtze Delta is becoming balanceable and dispersive, but compared with GDP and population's distribution, FDI's distribution is still denser. Second, the corealationship between FDI's inflows and the index of regional specialization is significantly positive (take Jiangsu province as an example) and themain determinants influence FDI's location choice among the sixteen cities are the factors which are token industry agglomeration such as sales revenue of industry products and FDI's previous accumulation. Third, FDI crowds in domestic capital and impels economic growth speed to converge among the sixteen cities and also directly pushes forwards the economic growth of the Yangtze Delta Region, though its magnitude is smaller than factors as domestic capital and labor force. Forth, FDI's industry structure is beneficial for Shanghai to grow up as "four centers" and for Jiangsu to get hold of communication industry etc as its competitive industry. FDI has significantly positive inter-industry productivity spillover effect in Jiangsu province, but as to Shanghai and Zhejiang province, this kind of spillover effect is not significant. Fifth, FDI spurs the foreign trade's growth in the Yangtze Delta Region and also plays a significantly positive role in Shanghai's bilateral trade. That is to say, the relationship between FDI and foreign trade in the Yangtze Delta Region is compensatory. Sixth, the amount of employees in foreign invested enterprises (FIEs) in the Yangtze Delta Region is increasing, but the relationship between FDI stock and employment growth is significantly negative, that is to say, FDI crowds out domestic employment. FDI's role of attracting immigration is not significant but for non-agriculture, FDI's role is significantly positive and also FDI has great significance for Shanghai to grow up as a world city.There are some policy implications. First, with the standard of combining FDI's quantity with its economic growth effects, the Yangtze Delta Region may extend the amount of accepting FDI, but should pay attention to impelling FDI to locate more evenly from ways of developing regional competitive industry and building up industry agglomeration. Second, induce FDI to adopt more advanced technology and encourage FDI to merge and acquire domestic enterprises to improve FDI's upgrading industry structure effect and productivity spillover effect in the Yangtze Delta Region. Third, formulate policies to limit the inflows of FDI that is neither technology nor knowledge intensive and to inspire domestic enterprises to grow up in relational industry to decrease FDI's negative effect to employment.Based on the research findings of FDI inflows and its economic effects in the Yangtze Delta Region and the fact that China has affiliated WTO, this paper finally outspreads some strategic thouthts for the Yangtze Delta Region taking use of FDI in the future. First, it should be looked on from the altitude of national competitiveness that the Yangtze Delta Region takes good use of FDI is awfully important. Second, the Yangtze Delta Region should build up uniform mechanism of dividing the work and cooperation to fetch in and take use of FDI. Last but not least, abide by WTO rules of equity and transparence and cut gradually the over national treatments for FDI to create more equitable policy circumstance in the region for domestic investment.