The Influence Of FDI On The Secondary Industry In The Growth And Structure Optimization

The industrial structure adjustment is an important factor to drive the economical development. It is a universal rule that structure adjustment could drive the economical development. Along with the deepening of reform and open policy, China national economy has received great changes. And it has already become the economy with the quickest growth rate, the longest growth duration and the stablest growth. Since China has comprehensively fulfilled the promises after joining WTO, it becomes much clearer that China would benefit from the economical structure strategic adjustment and will speed up the economical structure adjustment. This paper focuses on the effect of FDI on the growth and structure optimization of the secondary industry.Basic data about China secondary industry absorbing FDI is collected in the research. Then this paper reviews the basic circumstances of FDI investing in secondary industry in the last ten years in China, analyzes the correlation between economical growth of secondary industry and FDI, and it also analyzes the correlation between the upgrade of the interior structure of secondary industry and secondary industry absorbing FDI. In the light of the next China five-year plan about the strategic goal and emphases of the upgrade and optimization of China secondary industry, the directions and key field are analyzed about China secondary industry absorbing FDI in the following period. Relevant policy proposals are also presented.This paper uses both Cointegration test and Granger causal test to analyze the long-time correlation between FDI and the economic growth of the Secondary industry with data of the value-added of secondary industry and FDI over the period of 1990-2005.Finally,the short-time influence of FDI on the Secondary industry is tested using ECM. The result shows that FDI has a significant effect on the economic growth of secondary industry in china. In the long term, if FDI increased by 1%, the value-added of secondary industry would grow by 0.433%.FDI is the reason which leads to the change in the economic growth of the Secondary industry. However, the short-time influence of FDI on the Secondary industry isn't significant.To judge the Secondary industry structure optimization, The paper uses the value-added rate of weight industry and high technology industry separately to all industry. Related data from 1993 to 2004 are collected to test the correlation between FDI with the structure optimization of the secondary industry. The conclusion is that FDI has a positive influence on the structure optimization of the secondary industry. Eventually, this paper summarizes the problems existing during the process of China secondary industry absorbing FDI, and presents specific policy proposals for China to make good use of FDI in the future.