Research On The Relationship Between Actually Utilized FDI Of Jiangsu Province And Industry Conglomerate

In 2010,actually used FDI in Jiangsu province accounts to 28.498 million dollars and increase by 12.54% comparing that of the same period in the previous year. leading the first place in 8 consecutive years,the total amount has broken 20 million for 4 years.FDI flowed in to Jiangsu province increase rapidly and its ratio in the nation is high. But it also magnifies some prominent features:most of the FDI are from the developed country in the way of independent operation and flow to the manufacture industry in southern Jiangsu area.what on earth affects the FDI flowing in Jiangsu? what's the problem reflected by the agglomeration of foreign enterprises? How about the relation between industry agglomeration and utilized FDI in Jiangsu? All of the above will be solved in this paper.This paper conduct correlation analysis and granger cause test of the influencing factors(including pre-FDI, the average wage of workers, dependence on foreign trade, foreign location entropy, Jiangsu Province, the provincial market of Jiangsu, GDP of Jiangsu, number of industrial enterprises, the number of technicians) on the actually utilized FDI of Jiang Su based on 1999-2009 statistic data of 13 cities of Jiang Su. The results show that there is a close relation between industry agglomeration and FDI flowed in Jiangsu as the previous one is the cause of the later in 15% significance level.the regression analysis based on the In data indicates that the labor cost and industry agglomeration are two main reasons why FDI flows to Jiangsu.while analysis based on the standardized data shows that market of Jiangsu and dependence on foreign trade are two other factors affecting FDI in Jiangsu on 25% significance level besides the two above mentioned factors. Attention should be made to the results showed by the two models that there are positive relationship between the labor cost, industry agglomeration and actually used FDI of Jiangsu.However the second model shows that the domestic market in Jiangsu hamper the flow-in of FDI.On one hand, the analysis above indicates there has been subtle changes in terms of factors attracting FDI to Jiangsu from favorable polices and low labor cost to agglomeration tested in this paper. Besides, due to the rise of efficiency of labor, labor price isn't the curb of FDI. Obviously, the profits brought by agglomeration is greater than the cost caused by the rise of labor cost. On the other hand, the analysis also shows FDI location in Jiangsu is affected mainly by agglomeration factors such as pre-FDI, number of industry companies, entropy of foreign companies. While the study on the industry entropy based on the data of foreign enterprise suggests that FDI gathered in industries that are of high consumption, pollution or of labor-intensive. So it is difficult for Jiangsu government to identify a suitable way to develop industry agglomeration for the use of FDI. So on the basis of depictive and empirical analysis, this paper put forward some suggestions:make every endeavor to develop emerging industries and restrain industries of high consumption, meanwhile improve the relative infrastructure through accelerating distribution in regions and optimizing resource allocation, in turn to guide the foreign companies to localize.