Study On Industrial Structure Effects Of Foreign Direct Investment In Chongqing

Since reform and opening up in1978, China has absorbed much of foreign directinvestment. The scale and amount that we make use of foreign direct investment havebeen increasing, and the impact of foreign direct investment over economy is becomingmore and more important. AS the fourth municipality after Beijing, Shanghai, Tianjin,and the financial center among western regions, Chongqing has been one of the citiesforeign direct investment focuses on. In2011, the State Council passed “The regionalplanning of economic zone in Chongqing and Chengdu”, which positioned ChongqingNational City. Till now, Chongqing Liang Jiang New Area is the only state-level newarea among landlocked cities, also the national comprehensive reform pilot urban andrural areas, the financial center and innovation center of the upper reaches of theYangtze, all of these have created supporting policies to absorb foreign directinvestment for Chongqing.The data of article comes from statistic almanac about Chongqing and related webs.And we will use qualitative analysis and quantitative analysis to study the issue. Thearticle introduces the background, significance, and research status in domestic andabroad firstly; expatiate theory of foreign direct investment and industrial structure;sums up the current situation of foreign direct investment and industrial structure ofChongqing. Then the article analyses the relation between foreign direct investment andindustrial structure in Chongqing depending on statistical data. In the end we putforward the countermeasure and advice combing the actual situation in Chongqing.Firstly, the article analyses the relationship between the FDI and economicdevelopment in Chongqing, studies have shown that: there is a positive correlationbetween FDI and economic development, and though the growth of FDI and economyis not stable, there exists a co-integration relationship; Granger-causality test indicatesthat FDI pulls the economic development in Chongqing, but the economic developmentdoesn’t pull FDI.Then, With Koyck distributed lag model, the article elaborates the impacts totalamount of foreign direct investment has on the industrial structure of Chongqing. AfterModeling, it focuses on eliminating the correlations between residual error andexplanatory variable and the autocorrelations of residual error through the method ofinstrumental variable and generalized least squares. Studies have shown that: themarginal impacts of total amount of foreign capital on the GDP of the secondaryindustry are the most obvious and decay the slowest. On the contrary, the impacts on the GDP of primary industry are the smallest and decay the fastest. Owning to these impacts,the industrial structure of Chongqing tilts to the secondary industry and tertiary industry.Thus, these changes promote industrial restructuring and optimization.