Fdi And China's Foreign Trade Performance: Theoretical Model And Empirical Analysis

With the rapid development of globalization, the relationship between trade and investment is interconnected than ever before and Foreign Capital (FC) has become the major factor that influences the whole country's trade growth. On the whole, the interaction and mutual promotion between the international commodity trade and Foreign Direct Investment (FDI) are both increasing and expanding rapidly. But concretely speaking, what on earth is the exact relationship between the international commodity trade and FDI in one country under the condition of economic globalization? How do the changes of one industry's utilization of FDI influence its import and export as well as other industries? What's the relationship between China's FDI enticement and China's foreign trade? What are the influences our FDI enticement has on our Trade Structure (TS), Export Competitiveness, Intra-industry Trade (IIT), and Terms of Trade (TT)? Theoretically and empirically, this dissertation summarizes and analyzes the questions mentioned above. They are practically significant to issues including further opening-up, FDI enticement, and proper FC policy formulation and are also the main content of this research paper. Following the thought in the Kojima Model that direct investment is the synthesis including capital, technology and management skills, this dissertation brings forward the concept of the technology investment and draws a conclusion based on analysis on the partial equilibrium that FDI into a sector should cause an increase in the net exports of that sector and a decrease in the net exports of other sectors through abstracting other industry's resources. In the light of our country's reality, with the increase of FDI enticement in the Hi-technology industry and high added- value industry, it will promote these industries' net export and thereby optimize TS. Meanwhile because TS is closely correlative with Industry Structure (IS), Revealed Comparative Advantage (RCA), IIT and TT, we can draw a conclusion that FDI can have a certain effect on TS, IS, RCA, IIT and TT. The empirical results in the chapter 4 are in accordance with the conclusion of the theoretic model. By above researching, this paper can be propitious to providing the theoretic base and empirical proof for the proper FC policy formulation in our country.Chapter 1 is the introduction. It includes five parts: questions raise, trade and investmentsLiteratures summed up from the theoretical and empirical aspects, the research status quo in domestic academic field, analytical orientation, and structure arrangements of this paper. In Chapter 2, a technology-specific capital and a partial equilibrium model are given and a proposition of the relationship between commodity trade and FDI is educed. By expanding the proposition, this dissertation's central proposition is educed: FDI into a sector should cause an increase in the net exports of that sector and a decrease in the net exports of other sectors by abstracting other industry's resources. In the light of our country's reality, with continuously increasing FDI being put into the capital-intensive and technology-intensive industries after the 1990s', the increase of FDI will accelerate the outputs and net exports of these departments and meanwhile slow down the outputs and net exports of other departments. Therefore it will promote these industries' net export and optimize the TS. Meanwhile because TS is closely correlative with IS, RCA, IIT and TT, we can draw a conclusion that FDI can have a certain effect on the TS, IS, RCA, IIT and TT. Therefore, it can influence TS, RCA, IIT and TT since TS can have influence on them. In Chapter 3, the emphasis is on the general description of the FDI and Foreign Trade (FT). From the gross point of view, the speed of FDI enticement and FT growth are much faster than that of GDP growth in China. From the structure point of view, the structural characters of FDI and FT are correlative. From the imports and exports of Foreign Invested Enterprises (FIES) point of view, t...