The Analysis Of The Mechanism And Economic Effects Of Foreign Capital Merger And Acquisition On Host Country's Industrial Safety

Foreign acquisitions and mergers has gradually become an important way of foreign direct investment,which has contribution to the development of the enterprise of the host country,but also has threaten to the industry security of the host country.This paper analyzes the mechanism of foreign mergers and acquisitions and its economic effects from the perspective of the host country industry safety,on the basis of studying the basic theory and the status quo of foreign mergers and acquisitions and industrial security.The paper first studies the motive machinisms of foreign mergers and acquisitions, including economies of scale dynamics,market dynamics,cause transaction costs; then sets up a game model,analyzing operating conditions of foreign mergers and acquisitions under the premise of ensuring the industry safety of the host country. And the conclusion is:(1)The difference between the cost of foreign products is an important factor,and the greater the difference is,the stronger motive of M & A is;(2) the degree of product differentiation is also important,and with the degree of product differentiation getting lower,the M & A motives are becoming stronger.The impact mechanism of foreign mergers and acquisitions to industry safety of the host country works from the following three aspects:Firstly,unreasonable distribution in different industry of foreign mergers and acquisitions;secondly,the obstacles of foreign acquisitions of technology spilling out;thirdly,foreign mergers and acquisitions supplant the domestic capital.Then on the basis of previous analysis,settlement mechanisms to the host country industry safety in front of foreign mergers and acquisitions should be reducing costs, improving the degree of product differentiation,and the formation of a unified market.Foreign M & As has both positive and negative effects on host country's industry safety.The positive effects include the effect of capital-led,technology spillover effects,effects of industrial upgrading,industrial welfare effect;and the negative economic effects include foreign capital crowding-out domestic capital effect, industrial controlling effect,the imbalance of industrial structure.In this paper,the econometric model is established to analyze the economic effect of foreign merger and acquisition to the host country's industry safety.And the result is that there are large differences in the three industries of China,which proves further the previous theoretical analysis.In face of industry mergers and acquisitions to maintain its industry security,China should learn from the experience and lessons of other countries and the government, industry and enterprise should work together to improve our country's industrial competitiveness.