The Study On Impacts Of Foreign Direct Investment’s Spatial Effect On Industrial Structure Upgrading

The positive and negative impact of FDI on industrial structure upgrading has been researched by many scholars. Most of them put their analysis on "How FDI flowing into one district could affect the industrial structure upgrading in this region". However, few of them cast their eyes on "What’s the impact of FDI flowing into the regions around it on the industrial structure upgrading in this district". At the same time, the roaring cost in the east district makes Multinational Corporation reconsidering the regions they will invest. We cannot neglect the outflow of FDI could affect the industrial structure upgrading in such region. So the influence of flowing FDI among these regions on industrial structure upgrading should be researched ulteriorly.On the basis of the achieved conclusion and based on the theory of new economic geography firstly, we state the process of industrial conglomeration in some region and the regional choices of FDI presuming that economies of scale and transportation cost exist. At the same time, we use the core periphery model to analyze when the equilibrium is broken up by the external shocks, the industrial structure among the regions and the Multinational Corporation’s regional choices will change and never return to the original level by the influence of "location stickiness". Then, we analyze the function of FDI on industrial structure upgrading and its mechanism by theory. At last, we analyze the mechanism of the spatial spillover of FDI in the view of the competitive effect and demonstration effect of Multinational Corporation and so on.In the part of the empirical study, we firstly analyze the spatial auto correlation of FDI in the range of 314 prefecture-level cities and municipalities. Finding that FDI in adjacent areas have significant feature of spatial auto correlation, and the HH-level agglomerational areas has the trend to move to the north region. Then, we find that the proportion of FDI in east is decreasing, but the ratio of industrial structure changing has improved substantially after analyzing the changing of the industrial structure. The proportion of FDI in middle and west is increasing and the ratio of industrial structure changing has obviously improved. At last, we build spatial panel Durbin model to estimate the regression coefficients of the variables and we find that both of the local FDI and the FDI around the region have positive effect on local industrial structure upgrading. In the conclusion, we suggest that each region should envisage the competition from surrounding areas and their positive effects on local economy when improving the economic environment to attract foreign direct investment.