FDI’s Comosition And Competitiveness Effects On China’s Urban Economic Growth-Shift-share Analysis

China enjoys the second largest GDP in the world, meanwhile it suffers an uneven development among regions. The east region is very rich and well-developed, while the central and western areas are quite underdeveloped or slowly growing. Regional competitiveness is made up of industries with different growth. Since FDI has been widen seen as the drive of regional economy, it also plays an great role in industrial competitiveness and industrial structure. Studying how to estimate FDI’s contribution to regional growth in the perspective of industry, make use of FDI to adjust industrial structure, allocate resources, cultivate promising industries, is very conducive to lower the gap of regional economic growth.The compostion effect (MIX effect)reflects the extent of regional industry dominated by the national quickly growing industries, and the competition effect(DIF effect) shows the level of the region’s industrial competitiveness on the whole. We use the two indexes to describe the industrial structure and competitiveness of the region. On the assumption that cities with different MIX effect and DIF effect will explore different porportion of the inward FDI, this paper examines the contribution of FDI, MIX effect, DIF effect and the crossed term of FDI and the two indexes on regional economy growth. The result reveals that the dominating force transfers from the scale of city to competitive industries’development. Small-and-medium sized cities may beat large cities which enjoy advantages in industry scale and abundant resources with allocating most of their resources to their pillar industries. The pattern of FDI has changed toward R&D industries during the two time stage. This will crowd out many less efficient domestic companies in the short term. The infrasturcture has played a better role in economic development, but is still not the major impact factor.