The Analysis Of FDI In The Manufacturing Industry Upgrading

Since initiating the reforms and open policy, Jiangsu attracted a large number of Foreign Direct Investment, which majority flew to manufacturing sector, to revitalizing the economy. FDI inevitably influenced the development and upgrading of manufacturing industry, negatively or positively. Thirty years have gone, does FDI promote the economy and upgrading of manufacturing? In the new economic situation, how to reasonably and effectively make use of FDI, to enhance the efficiency of resources allocation and productivity, to promote the optimization of industry structure, finally to upgrade the manufacturing industry?To analyze these, the dissertation is based on relevant theories of foreign direct investment and industrial upgrade. Then, it constructs a effect mechanism framework about how FDI influences the industry upgrade, analyzes the probably positive and negative effects on upgrading manufacturing industry, from the aspects of the industrial structure optimization and efficiency improvement. So we also take the empirical test in two levels to explore the effects FDI did in the upgrading of Jiangsu's manufacturing, based on the analysis of the development of it and the status of FDI. The first, using distribution lag model, unit root test co-integration test and granger causality test, it checks the relationships between FDI and industry growth, heavy industrialization development, hi-tech industry development, analyzes from the structure optimization angle. The second, it estimates the productivity of domestic and foreign enterprises and their TFP indexes. Comparing them, then the article focus on whether there is FDI spillover effect in manufacturing industry and what effects on improving the TFP of domestic enterprises. The model combines the TFP and its indexes with the spillover effects of inter-industry and intra-industry, and integrates the theory of input-output model, does the econometric analysis on panel data model.The research shows as the follows. (1) FDI plays a positive role in promoting Jiangsu's industrial output growth, though the effect decreases every year. (2) FDI does good to develop the heavy industry and hi-tech industry, pulls the optimization of industry structure. (3) The foreign enterprises in the industry which attracts more FDI perform better in productivity and scale efficiency than domestic enterprises. (4) The spillovers from FDI perform in three aspects such as the intra-industry spillovers, backward linkage spillovers and forward linkage spillovers. They do differently in the growth of the domestic enterprises'TFP: The intra-industry spillovers are negative; Forward linkage spillovers enhance the levels of total factor productivity, while backward linkage spillovers are not notable in improving it. After analyzing the reasons of the negative spillovers and the problems existing in using the FDI, the dissertation finally gives some suggestions to further upgrade the manufacturing industry from"Made in Jiangsu"to"Created in Jiangsu", such as improving the level of research and avoiding the over-dependence on FDI.