| Abundant statistic data show that nowadays obvious industrial agglomeration effect arising from foreign direct investment (FDI) has exited ubiquitously in many host countries. So do many theories and demonstrative analysises which also intensify that local industrial agglomeration in the context of globalization will help a region upgrade its international competitivity of industries and strengthen its attraction for further FDI inflows. As a result, it is not applicable for a host country to just push preferential policies for FDI. Based on facts of FDI's agglomeration effect, the article focuses on the degree of effect that the phenomenon brings to FDI's local choice in China so that a more practical strategy for future FDI absorption can be included. The most important part in the text is the regression analysis for China's FDI inflows data in the past 26 years or so. From the mathematical model, it has been concluded that today the major factor for FDI absorption in China has been changed from preferential policies to the degree of local industrial agglomeration and correlation. So it is noticeable for a region to carry out a series of policies emphasized on industrial agglomeration, industrial correlation and as well as economic openness. By doing so, a kind of dynamic comparative advantage based on more flexible policies can be realized for China's FDI absorption. |
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