Analysis On The Effect Of FDI On The Intra Industry Trade Of Industry In Shandong Province

With the rapid development of global economic integration, more and more Multi-National Corporation will transfer manufacturing, marketing, even R&D and service outward. This transferring can not only bring about the growth of FDI, but also can promote the development of host country’s foreign trade. The relationship between FDI and foreign trade is becoming more and more obvious. One of the hot issues in the international trade industry and even the whole economic circle is the relationship between foreign trade and FDI that showing in a country or area. Shandong province is a large province of industry, whose industry is developing rapidly. As one of China’s provinces whose economy especially industry develops rapidly, FDI attracted by Shandong province is not only can make up the financing gap, but also bring all kinds of trade brought about by the absorption of capital flows.On the relationship between FDI and intra industry trade, there is no conclusion:when the FDI is the horizontal type, the relationship between FDI and foreign trade is substitute; when the FDI is the vertical type, the relationship between FDI and foreign trade is mutually complementary; from the development practice of FDI in East Asia, the relationship between FDI and international trade is not just a simple complementary or alternative relation, while FDI may be transferred to third countries for trade.This paper builds a regression model between intra industry trade index and FDI, using the method of the theoretical analysis combining with quantitative empirical research, collecting and studying of a large number of statistical data with the help of tables, graphics and other tools. This papers studies whether FDI plays a positive or negative effect on intra industry trade in the industrial sector in Shandong Province. According to the current situation of FDI and the development of intra industry trade in Shandong Province, this paper offers some suggestions to raise the level of industry trade policy, to guide FDI to promote intra industry trade structure optimization and upgrading; to strengthen the reasonable guidance on capital intensive foreign investment; to adjust foreign trade development strategy.