Using The Effect Of Fdi On Local Industries To Upgrade

With the increasing openness of the economy, the upgrading of the industrial structure of one country or one region has not merely relied on the promotion of the internal forces. External factors are equally important. The economic growth of China's coastal areas is mainly promoted by foreign direct investment. From the early success of the Pearl River Delta region to the Yangtze River Delta economy leading the entire nation, we can see that the use of foreign capital has great impact on China's realization of industrialization.Kunshan has absorbed a large amount of FDI to promote the upgrading of the industrial structure under this tide. Based on the study of Kunshan, this essay will do a research on FDI's positive and negative effects of the industrial structure, combining foreign direct investment theory and upgrading of the industrial structure theory. The results show that FDI in Kunshan has promoted the advancement of industrial structure, rapid development of outward supporting industry, as well as the regional technology progress through capital effect, industry linkage effect and technology spillover effect. But FDI in Kunshan has also brought in negative effects, such as industrial deviations, and insufficient development of local enterprises, as well as negative spillover effect on state-owned and collective enterprises.It is necessary to further foreign-invested enterprises to play a positive role and avoid their negative effects. Therefore, we should strengthen policy guidance for industries, improve incentives for foreign investment, put great attention on the development of local enterprises, promote independent innovation of local enterprises and improve the region's investment environment.