Empirical Research About The Influence Of FDI And Industrial Structure In Zhejiang Province

Since the reform and opening, foreign direct investment has been an important strategy in the process of the development of economy in china. As a leader in the development of economy, Zhejiang Province is not lack of fund like other provinces in Yangtze River delta, but lack of the advanced technology and management mode, meanwhile in the downstream of manufacturing industry. Using the foreign direct investment which can bring the advanced technology and management mode, which can promote upgrading and adjustment of industrial structure directly or indirectly in Zhejiang.This paper summarizes the theory of the upgrading of the industrial structure from the three industries, the manufacturing sector and the global value chain in the theoretical side. In evidence, this paper analyses the relationship between FDI and the upgrading of industrial structure in Zhejiang Province from two aspects of views. First, basing on the theory of the upgrading of the three industries, the relative change of the three industrial added values as the main indexes, the foreign direct investment (FDI) of the three industries as explaining variable, and the added value of the three industries as the explained variables, it researches the relationship of regression analysis using the data from 1999 to 2008 in Zhejiang Province. According to the result of the analysis shows that FDI has the greatest and positive contribution in the second industry, the little and the negative contribution in the third industry and the first industry. Secondly, basing on the theory of the upgrading of the manufacturing sector, it researches how FDI influent the industrial structure basing the manufacturing refined standards, the total assets proportion of wholly foreign-owned enterprise of Zhejiang Province in manufacturing industries (p) as the explanatory variables, the proportion of the value of the manufacturing industries (Y) was explained variables. Using regression analysis researches the relationship as the panel data of 27 manufacturing industry from 1999 to 2007(not including the tobacco industry and technology and other manufacturing industries). From the analysis results, we can clearly see the strong positive correlations between the foreign direct investment in Zhejiang Province and manufacturing sectors. If the proportion increases one percentage point in FDI, the proportion will increase 0.81 percentage point in manufacturing sectors. Finally, it puts forward related suggestions about the continuous upgrading of the industrial structure and using the foreign direct investment effectively in Zhejiang Province. Basing on the need and absorptive capacity of Zhejiang Province, We should improve infrastructure and service-oriented industries, foster the ability of local enterprises actively, and strengthen the policy of human capital and industrial technology to improve the total factor productivity of Zhejiang Province.