Research On The Interaction Of FDI And Industrial Cluser

After the reform and opening up, China has gained a lot in absorbing foreign investment and it is noted that "Industrial Cluster "always occurs during the process of FDI. Based on the Statistics, in China, foreign capital mainly flows into the east coastal region such as Pearl River delta and Yangtze River delta. Exactly, the development of industrial cluster is more mature in these regions. The World Investment Report in 2001 analyzed that the trend of FDI is also highly centralized around the world, and the trend is spontaneous, orderly, shows obvious feature of industrial cluster.In this article, We try to use the theory of FDI and Industrial Cluster intergratedly to elaborate not only the role and mechanism which foreign investments act in the formation and development of industrial cluster, but also the function of industrial cluster in attracting foreign capital. The perspective of this article is the subject of FDI--Multinational Corporation, and we use P.Romer's study of endogenous economic growth model, basing on the condition of profit maximization that multinational corporations would make when they invest. Then we could get the conclusion: FDI and industrial agglomeration would promote and affect each other. After, we have demonstrated the interaction mechanism from two aspects: for one, from the perspective of the industrial cluster's formation and development, we firstly raised and explained the FDI--Pyramid Model explaining the formation mechanism of the industrial cluster, and elaborated the promotion function of FDI to industrial cluster. For another, from the perspective of drawing FDI by industrial cluster, discussing the special advantages in economic externality, industrial matching ability, effect of foreign capital agglomeration, region opening degree, and regional brand of industrial cluster.Based on the study of these theories, we do the empirical analysis on Tianjin New Coastal Region. First, using data to analyze the status and features of FDI in this region; measuring industrial clusters of different developing degree in this region by calculation of location entropy coeffient and dynamic agglomeration index. Then, giving the example of the mobile phone manufacturing industrial cluster in Tianjin New Coastal Region and making better explanation of its formation mechanism and process by using of Pyramid Model. We also have analyzed the FDI's promotion role for its development. At last, by use of grey relation analysis, we choose 7 indexes which could reflect cost factor, market factor, cluster factor and government factor of FDI, and these indexes would affect FDI in New Coastal Region most. We have calculated correlation degree and relational order between the 7 indexes and FDI, and the result shows that cluster factor has already been the most important one that attract FDI. Therefore, combining with theories and empirical analysis, we could conclude that FDI and industrial cluster are promoting and affecting each other, promoting the development of regional economy together. Then we could raise the related policy suggestion based on the active relationship of FDI and industrial cluster.