The Analysis Of The Relationship Between The Inflow Of FDI And The Development Of Trade In Shandong Province

The development of import and export trade of Shandong province has brought greatvitality and vigor to the economy of Shandong province. As an important trade andeconomic province of China, Shandong province started to open to the outside earlier.After thirty years of reforming and opening up, foreign direct investment in ShandongProvince developed rapidly, Introducing and absorbing of foreign direct investment. wasan important part of strategies of the economic development in Shandong province. Mostof the domestic scholars has a very mature research on the theory of foreign directinvestment and its empirical research. With China’s further integration into the worldeconomy, foreign direct investment is bound to keep warming trend and the research on therelationship between foreign direct investment and foreign trade has more practicalsignificance. The relationship between foreign direct investment and foreign trade will alsoappear particularly necessary to treat Shandong Province as a region. In the global complexinternational background, relationship between them is conducive to Shandong province toestablish reasonable trade policy, promote coordination and propose policy of foreigndirect investment conducive to Shandong province in the economic globalizationenvironment with opportunities and challenges, seize opportunities, meet challenges andhelp Shandong province to realize the transformation from a large foreign trade province toa strong foreign trade province.The mainly data of the paper is from Shandong statistical yearbook, usingeconometric research methods, firstly, traditional theory of trade and investment areintroduced, and then foreign direct investment in Shandong province, the foreign tradehistory, the current situation and the weakness in detail. Based on the current situation andfeatures of foreign direct investment in Shandong province and the foreign trade, we guesssome correlation may exist between them, and then study the relationship between themfrom three aspects (the volume of trade, the mode of trade and the structure of trade)usingthe data in recent years with stationary test, cointegration test and Grainger test. This paperwe study the relationship between foreign direct investment in Shandong and the level of foreign trade with a series of methods. On the reach of relationship between the level offoreign trade and foreign direct investment in Shandong province, the empirical analysishas carried on, found that there is a two-way causal relationship between the import andexport and the foreign direct investment in Shandong Province, namely the import andexport are the reasons for the change of foreign direct investment, foreign directinvestment is the cause of the change of import and export, both influence each other andthere is a long-term equilibrium relationship between import and export and foreign directinvestment, proving the existence of the complementary relationship between them,namely the development of one party had promoted the development of the other party.Then using the method of least square estimation to conduct the structure of linear relationof FDI in Shandong province and the trade and commodity, drawing the conclusion thatthe degree of FDI influencing processing trade is greater than the general trade, the degreeof impact on industrial manufactured goods is greater than the primary products. Finally,points out the problems in its development and according to the specific situation ofShandong Province, strategies of how to promote foreign direct investment are given aswell as some policy and suggestion to promote the development of foreign trade.