The Influence Of Foreign Direct Investment On Industry Clusters’Innovation Ability

As the main way of the capital to achieve the optimal allocation around the world,foreign direct investment (FDI) makes important contributions to the internationaleconomic development. At the same time, it takes the multinational companies as thecarrier in the process of regional economic growth, and playing a more and more importantrole in increasing the capital quality, and optimizing the industrial structure. Industrycluster as a new way of organizing the regional economy has significant influence on thedevelopment of regional economy, and its formation and development, in a large extent,benefited from the concentration effect of FDI. It is the most urgent and importantproblems for the development of Chinese industry to promote the traditional industrycluster and foster the emerging strategic industry cluster. The only way to solve the aboveproblems is to build the innovation ability of industry cluster. It is the innovation thatmaintains a power source for an economic organism. In order to achieve the long-termprofitability and vitality, it is necessary for the industrial cluster to get the internalmechanism and external power for innovation.In recent years, Shan Dong province has maintained a strong growth momentum inattracting foreign direct investment, and the development of industrial cluster in every cityand various sectors has also obtained great achievements. So, there’s no doubt that it willhave important realistic meaning and practical meaning whether the foreign directinvestment participation promotes innovation ability of the industry cluster construction,and whether it infuses the fresh lasting vitality in sustainable development of industrycluster.This paper considers that the FDI did boost the development of the cluster innovationability, by analyzing related literature at home and abroad and on the basis of theory basedon mathematical analysis and actual cases. This paper first explains the FDI’s all kinds ofpromoting effect on industrial clusters innovation ability, and then gives the qualitative andquantitative description to the current situation of the development of industrial cluster inShandong province, and analyzes the three big industry clusters in the measure of locationquotient. Through the description of the FDI in Shandong province from such aspects asgross, the horizontal regional distribution and vertical industry distribution, we can furtherexplain the FDI has various effects on industry clusters. On the basis of empirical analysis,we come to the conclusion that the introduction of FDI can’t be catalytic to internalinnovation ability of industrial clusters, but have certain extrusion effect. Finally, with all the above things considered, in order to keep sustainable competitive advantages, wepropose how to enhance its innovation ability with FDI in Shandong province.