The Determinants Of The Vertical Linkages Of TNCs On The Host Country's Related Industries

With the TNCs-led international production system increasingly become sophisticated, transnational corporations have strongly vertical linkage effect on upstream-downstream industries in host country. However, the linkage effects in our country are unequilibrium. As an open area, the Bohai Sea Ring Area attracts more attention, and there are more foreign direct investments in this area. So based on the example of the Bohai Sea Ring Area, probing into the vertical linkage effects and the determinants is helpful to the impersonality and full-scaled understanding of the spatial distribution, production character and economical effect of the TNCs. It is also full of the theoretical and reality sense. This paper mainly analyses the determinants which have influenced the vertical linkage effect. At first, this paper introduces the conception and the form of expressions, then analyses the reflection and characteristic of the vertical linkage effects: technical spillover effect, associate employment effect, market structure adjustment effect, industrial assembly effect and industrial structure adjustment effect. After that, this paper advances eight key thesis about the vertical linkage effect between transnational corporations and the industries in host country. Then this paper cites an dominant company in Bohai Sea Ring Area to verify the thesis, and gets the conclusion: the strategic role, founding time and the market positioning of the foreign affiliates have positive correlation with the linkage effect on upstream-downstream industries in host country, and the linkage effect varies from the different industries, the more development of the host country, the deeper linkage forms. Last this paper gives the suggestions for policy design.