Based On The Gravity Model To Analyze The Impact Of Outward Foreign Direct Investment On Exports

The Outward Foreign Direct Investment of China has been growing rapidly since2002.Whether The Outward Foreign Direct Investment has promoted China’s exports, or enhanced the host country’s overseas production to suppress the exports of our country has become a critical problem. What is more, how much is the influence the Outward Foreign Direct Investment exerts on exports?Based on the reality of the Outward Foreign Direct Investment and exports of China, this thesis builds the gravity model of trade, which uses panel data for regression analysis. Firstly, we derive the gravity model of trade. And then, We direct China’s investment in the host country, the per GDP of the host country, whether China and the host country are bordering and whether a free trade agreement is signed between the two countries into the model as explanatory variables in order to make a comprehensive investigation into our exports. Finally the sample is divided into two groups, which include the developed countries and the developing countries, so that we can compare the differences of the effect and analyze the causes of the differences to make specific recommendations. The main conclusion is that The Outward Foreign Direct Investment undoubtedly plays a positive role in promoting the exports of China.