Research On The Influence Of FDI On China’s Producer Service Agglomeration

With the continuous expansion of China’s opening-up, more and more foreign direct investment (FDI) being invested in the service industry has become an indisputable fact. While participating in local investment, FDI enterprises will also attract other enterprises which associated with their business to promote the agglomeration of local industry. Previous studies rarely involved the impact of FDI on industrial clustering. Based on the new economic geography theory and related theory, the essay try to analyze the FDI’s effect on industrial agglomeration. In order to further study the impact of FDI agglomeration, the essay will discuss the service industry as the breakthrough point.This paper will measure and analyze the status of China’s producer service industry. It’ll be found that, on the industry level, the relative level of productive service industry in the overall lead in the public service industry and consumer services, and higher than the manufacturing sector; while on the regional level, producer services industry manifests multiple industries’Geography copolymer phenomenon, especially significant regional agglomeration. Regional distribution of producer services is not balanced, the eastern region has become the center of producer services, while other areas become peripheral Chinese producer services, and productive service industry has gradually strengthen trend in eastern region.FDI infiltration and producer services agglomeration has a relatively strong correlation, no matter in industry or regional level, according to the correlation analysis between FDI and producer services. In order to further carry out empirical study on the impact of FDI on producer services agglomeration, this paper is to establish panel data model and analyze the different roles of factors in producer service industry agglomeration from both the time and spatial dimension, with the panel data of14service industries and30provinces during2003-2012. Econometric analyses demonstrate as follows:On the industry level, FDI penetration, knowledge factors, level of information, manufacturing demand will promote agglomeration of producer services; while government forces will hinder agglomeration of producer services. On the regional level, FDI penetration, knowledge factors, level of information technology, manufacturing demand, and government forces are promoting factors of productive service industry. Labor costs are hindering factors of productive service industry. Unlike previous studies, local protectionism has a positive effect on producer services agglomeration. This may be due to the local government’s policies which try to promote investment and economic development, will reduce the barriers to entry of producer services and increase the demand for producer services. Besides, productive service industry’s relevancies in adjacent areas are obvious, and the improvement of regional agglomeration of producer services will promote the accumulation of producer services in surrounding areas.To better promote agglomeration of producer services, and exert agglomeration’s role in promoting the economic acceleration, the dissertation put forward some effective political suggestions based on theoretical and empirical research analyses.