Study On Middle Area Industrial Agglomeration And Foreign Direct Investment Relationship

With the rapid development of the world economic regionalization globalization, the impact on the national economies of foreign direct investment (FDI) has gradually increased. China has been operating actively in introducing foreign policies since the1978’s Reform and Opening-up policy, and the status of FDI (Foreign direct investment) in the promotion of China’s economic development can not be ignored especially after our participation of World Trade Organization. The six provinces in the central part of China (including Shanxi Province, Henan Province, Jiangxi Province, Anhui Province, Hunan Province, Hubei Province) has an important strategic position in the geography and economic development, for its connecting role between the eastern and western regions. After the slogan "to promote the rise of the central region" has been first proposed by the government in2003, the lack of FDI fund has become an important factor in the rapid economic development for the central region. The six central provinces develop an opening economy to improve their attraction on FDI, and at the same time, they increase foreign trade policy suppuration, as a result, the investment performance has been significantly improved. The continuous inflow of FDI has enhanced not only the industry competitiveness within the six provinces, but also the capacity for the sustainable development in the region. Meanwhile, the industrial agglomeration in the central region has become increasing evident, the scale and the number of industrial agglomeration are growing, and it also plays an important role in promoting the economic development of the central region. However, the current study mainly focuses on the study of a single foreign direct investment in the central provinces; there is relatively little research on the interaction between FDI and industrial agglomeration of the central region. In this context, the study of interaction between FDI and industrial agglomeration in the central region will have important theoretical and practical significance for the effectively attracting and applying FDI as well as promoting the developing of local economy.The total amounts, the sources the entering methods and the industrial distribution of FDI, the concrete expression and the development environment of industrial agglomeration are analyzed in this paper. In the empirical part, according to the34industry from the central region of six provinces’10years’ panel data, I’ll use the econometrics ADF test, Granger causality test and other methods to study the interaction between FDI and the industrial agglomeration of the central region. Finally, according to data analysis and the results of empirical research, recommendations will be put forward to promote investment and economic development of the central region.