The Impact Of FDI On Jiangsu's Industrial Structure Adjustment

Since reform and opening up in 1978, China has absorbed much of FDI and has become the world's third-largest FDI destination. Jiangsu, as one of the leading province in China's economy developing, has maintained China's first FDI province for seven consecutive years. What will happen to the economic structure when large amount of FDI arrives in Jiangsu? Our country is experiencing a new round of industrial restructuring and upgrading, how can Jiangsu make good use of FDI to promote Jiangsu's industrial structure? This is where the purpose of this study located.This paper takes the studies of FDI effects on the industrial structure as the main line. First of all, the paper conducts literature review and the recent status review to clarify the significance of the problem, to tease out the structure of how FDI play the part in industrial structure, that is, the positive and negative effects of FDI. Secondly, the paper analyzes the status and characteristics of FDI and the industrial structure of Jiangsu. Then, the paper analyzes the use of FDI in Jiangsu, between the three industries and within the industry. In order to do further research, the paper builds a Panel data model, basing on the inter-industry and intra-industry data of Jiangsu Province, Suzhou City, China to measure the impact that FDI works. The results show that: FDI in Jiangsu optimized the amount of capital in economic development, and FDI has brought advanced technology and modern management experience. From the capital and technology, directly and indirectly, FDI promotes the industrial structure in Jiangsu. FDI shows more significant and positive effects on the secondary and tertiary industries in Jiangsu Province, Suzhou City and China. Positive effects of technology-intensive, capital-intensive and labor-intensive industries are greater in Suzhou, then in Jiangsu, then in all the country. Why? Because of the differences of structural tilts, industrial structures, manners of FDI, FDI source and backward areas in Jiangsu.This paper insists that, Jiangsu should inherit what it has done well in FDI using, play its advantages and learn the advanced experience of others. Jiangsu should actively adjust the use of FDI strategy and policy orientation, strengthening the industry guide, encouraging FDI in hi-tech agro-forestry and green agriculture, guiding to increase FDI in emerging industries, guiding the use of foreign direct investment to transform traditional industries, encouraging FDI to increase investment in modern service industry. Meanwhile, Jiangsu should promote FDI to cooperate with local economic interaction to achieve the promotion of FDI in upgrading the industrial structure better.