Relationship Between FDI And Industrial Agglomeration Of Beijing

As an important form of international capital flows, FDI has greatly contributedto Beijing’s economic development in the past few decades. However, according tocity function positioning and development requirements of international metropolis,optimizing the urban space layout and promoting industrial upgrading has become thefocus of the work in Beijing. Therefore, in the new trend of economic development, itis need to rethink the introduction of foreign investment policy. Also noted thatindustrial clustering, as an important feature of regional industrial development, notonly greatly promote regional economic development, but also has an impact on FDIlocation choice.This article chooses Beijing FDI and industrial clustering as research objects,using a combination of theoretical and empirical methods. This article first reviewsthe theories of FDI location choice and industrial clustering, then analyses themechanism between FDI and industrial clustering and draws the conclusion that FDIinflows will promote the development of industrial clustering and high degree ofindustrial clustering will attract the continuous FDI inflow.In the empirical research part, this article first do a regression analysis about FDIand industrial clustering index, basing on the cross-sectional data from13industriesof tertiary industry in Beijing,2010. The result presents significant positivecorrelation between them. Then, this article selects the information technology,computer services industry as a representative industry to conduct a Granger causalitytest, the conclusion is as follows: in short term, FDI and industrial clusteringunidirectional causal relationship exists; in long term, their mutually reinforcingrelationship exists. Finally, the empirical model analyses show that FDI demonstrationeffect, infrastructure conditions, industry agglomeration levels, labor costs areaffecting FDI location choice.Therefore, as the research result shows, Beijing should balance industrial policyand foreign investment policy, making full use of their relationship to advancemodernization drive, bring about leapfrog development and ultimately achieve Beijing development strategy purposes in the new era.