The Effect Of FDI On The Manufacturing Industry Agglomeration In Shandong Province

Since the reform and opening up, the scale and amount of FDI (Foreign Direct Investment) have been increasing in China, and the impact of FDI to Chinese economy has also become more and more distinct. Hence, it is meaningful for the development of local economy with the help of foreign investment that we study the impact of FDI to industrial agglomeration. The development of local market economy and the diversion of international industry have made the result that the manufacturing industry of Shandong is agglomerate, which is one of the characteristics of Shandong province and is popular in electronic information industry, biopharmaceutical industry, ocean industry, auto and shipbuilding industry, appliance industry, textile industry and so on.The base of the paper is the impact of FDI to industrial agglomeration. After the study, it has found the positive and negative impact of FDI to industrial agglomeration, The positive impact includes riching the local factor accumulation, improving the local industry chain, expanding the local market space; the negative impact includes fluctuations of industrial agglomeration caused by FDI, making the local industrial agglomeration toward the bottom of the international value chain,and transfer or recession. After that, the paper has got the direct impact of FDI in Shangdong’s manufacturing industry to industrial agglomeration, by analysing the actuality of FDI and Shandong’s anufacturing industry agglomeration. At last, the paper has tested the above conclusion with Panel data with variable coefficients model, and has given the advises to Shandong province that how to advance industrial agglomeration with the help of FDI in manufacturing industry after getting and analysing the regression results. According to the theoretical and empirical research, the paper has got the conclusion that:agglomeration of most of the27two-digitmanufacturing industry in Shandong Province is obvious and the phenomenon is more popular in labor-intensive industry. The impacts of FDI to different industries in manufacturing industry are different. For example, the impact to capital-intensive and technology-intensive industry is not so distinct. Even though the impact to labor-intensive industry is distinct, the impacts are also different. The paper has explained the above conclusions, by researching the actual situation of Shandong’s manufacturing industry.