FDI Concentration And The Industrial Development Of The Yangtze River Delta Region

At present, Foreign Direct Investment (FDI) is being injected into the Yangtze River Delta Region at an unprecedented high speed, which has cast greater and greater impact upon the development of regional industries. While the total amount of FDI is on the rise, there is a clear tendency that FDI has high regional and market concentration. This phenomenon is the ultimate choice of FDI in order to build up its industrial competitive edge in the Yangtze River Delta Region. Through analyzing the reasons of the FDI concentration and their internal connections, this paper intends to survey the impact of FDI concentration on the development of regional industries.Then several conclusions will be reached to provide valuable insight into the industrial development of Yangtze River Delta Region.This paper starts from two surface layers of the regional and industrial flows of FDI ,pointing out its characteristics of regional and market concentration. Then, this paper further analyzes the internal reasons for the FDI concentration in respect of cluster economy, monopoly effect, the performance and transmission mechanism of the market structure, as well as changes in the strategic goals of foreign investments.In regard to the performance of FDI in the four typical fields, i.e. steel, auto, IT and textile industries, the paper holds that the regional concentration phenomenon of specific industry is just a special representation of market concentration. This has led to the core part, stating the current impacts FDI will have on the regional industrial.Furthermore, this paper explores the impacts of FDI on Yangtze River Delta Region from six different perspectives.It has great influence on the selection of leading industries in various areas within one region. By this, it prompts the integration of the specialization of regional industries in order to achieve reallocation of the resources among different regional industries. As a result, the speed of industrial upgrade can be enhanced in the Yangtze River Delta Region . This paperproves that FDI concentration has speed up the pace of regional market structure change. While unreasonable growing speed of market concentrate ratio of some pillarindustries is harmful to technology transfers. Concerning the integration of the regional industries, the paper illustrates that FDI can help to break up the obstacles caused by regional administration, thus opening a new pathway. Finally, it analyzes the reverse effect of FDI concentration on the policy of inducing foreign investments. And it points out that the cost of inducing foreign investment could outrun the benefit it brings if not carefully handled.Through the empirical analysis of related industries in the Yangtze River Delta Region, we have a clear picture of the exact influences FDI concentration in terms of both region and market on the development of regional industries. However, whether these influences are beneficial or harmful rely on certain prerequisites. Therefore, this paper concludes three major crucial factors for bringing FDI into full paly—regional market structure, the right mix of regional industries and the managerial policy on foreign investment.All in all, based on the above analysis, this paper states that Yangtze River Delta Region is currently at the transitional phase of regional integration. With an aim to improve the managerial scheme of regional FDI, four suggestions are made to actively promote the integration process.