Empirical Analysis On The Effect Of OFDI And IFDI On The Optimization Of China’s Industrial Structure

With globalization developing rapidly, the national economy exchanges more and more closer. International investment is an important carrier of international industrial transfer. Either from the perspective of the host country or home country, international investment has effect on a country’s industrial structure. In recent decades,China’s foreign direct investment inflows and outflows are developing rapidly.Since China is right in the critical period of economic transition, the industrial structure needs to be upgraded urgently. The purpose of this paper is to explore how OFDI and IFDI impact China’s industrial structure. According to results of the empirical analysis,the paper submits some suggestions about the upgrade of the industrial structure.The paper combines theoretical methods and empirical methods to research the topic. Firstly, the paper researches the influence mechanism of OFDI and IFDI to the industrial structure changes from theoretical aspect. Then,the paper analysises the present situation of China’s OFDI, IFDI and Industrial structure. Lastly,the paper empirically analysises the relationship between OFDI and industrial structure,as well as the relationship between IFDI and industrial structure.The research divided the industrial structure into two aspects——industrial value structure and employment structure. The paper’s empirical part chooses time series model and panel data model to research the effect of OFDI and IFDI on the industrial output structure and the employment structure. According to the regression equations,we get some suggestions.The conclusion is that OFDI and IFDI promote the industrial value structure and employment structure.In other words, OFDI and IFDI are conductive to China’s industrial structure upgrade.But the degree of promotion is different. From the value structure aspect, OFDI has a significant positive impaction on the tertiary industry and a passive impaction on the secondary industry. IFDI has obvious positive impaction on the secondary industry and the tertiary industry. From the employment structure aspect, both OFDI and IFDI have obviously active effect on China’s secondary industry and tertiary industry. So, OFDI and IFDI are conductive to the upgrading of China’s industrial structure.The developing path of developed countries shows that the more developed a country is, the greater proportion of the tertiary industry in the national economy is.Since China’s secondary industry still accounts for a large proportion now, China should develop the tertiary industry urgently to optimize China’s industrial structure.According to the study, China should guide foreign direct investment reasonably. Meanwhile, government should create a good soft and hard environment and improve domestic enterprises’innovation capacity and technical digesting ability, making the foreign direct investment and foreign direct investment play a important role in our country’s industrial structure optimization.This paper studies the effect of OFDI and IFDI to the industrial structure from theoretical aspect and empirical aspect, which has both theoretical and practical significance. China’s economic has developed rapidly in the past thirty years after reform and opening up. We should not only value the huge economic benefits, but also focus on the rationality of the economic structure. Only by this way can national economy develop sustainably. As China is in the critical moment of economic transformation, the conclusions will tell us how to use foreign direct investment to promote the industrial structure in China. So it is important and meaningful to research the topic.