The Research Of The Relationship Between FDI And Industrial Agglomeration In Fujian Province

Since the1980s, With the development of economy globalization, China absorbed large amount of Foreign Direct Investment (FDI), and the scale of FDI in China is increasing. After the reform and opening up, Fujian Province has made tremendous achievements in absorbing FDI. And it becomes one of the main districts attracting FDI in China for its geographical advantage and favorable policies. However, allocation of FDI in Fujian Province is unbalance, and it shows obvious geography conglomeration. Industrial agglomeration have gradually become a significant factor for Foreign Direct Invested Companies’zone selection, From this background, the article pays attention to the research of the relationship between FDI and Industrial agglomeration in Fujian Province.First, this paper defines some relevant terms in the field of the mutual relationship between Industrial agglomeration and FDI, and reviews some relevant domestic and foreign theories, sums up the main theory of FDI and industrial agglomeration and explains the mechanism of each other:it shows that FDI and industrial agglomeration have bidirectional influence each other. All of these support the basis for the later empirical analysis.Second, this paper is on the general description of the FDI’whole process and the general characteristics of FDI and Industry cluster in Fujian Province, and analyzes the reasons of the characteristic of both. Then this paper calculates the location entropy, by which account the degree of the industry agglomeration of the manufacturing sector in Fujian Province.Third, Based on theoretical analysis, the article demonstrates the relationship between FDI and industrial agglomeration in industry and district terms. Then it chooses one typical industry-telecommunications equipment industry for proof-test by Co-integration and Granger Causality Test. And it indicates that two have bidirectional cause and effect relation. According to this, it can be conclude that Fujian province’s FDI and industrial agglomeration exists positive correlation in fact.Finally, the article makes relevant suggestions to FDI and the development of local industry cluster based on the study’s conclution.