The Explanation Of FDI In The Change Of The Intra-industry Index

China’s gradual integration into the world economy since the reform and opening,it has been a trendthat the same industry have the intersection trade with its partners both in exports and imports. in the1960s,thetheory of intra-indurstry trade between the developed countries have begun to rise and gradually spread acrossthe whole world,following the international competition theory and the Lyon tin’s mystery.Obviously theintra-industry theory has been another challenge to the traditional trade theory basing on the comparativeadvantage.This paper refers to the relevent classical scholars and literature,selects the relatively highconcentration of foreign capital,technology and capital-intensive electronic communications equipmentmanufacturing industry. the use of Grubel&Lloyd metrics and "Aquino" correcting method,based on theSITC3-level data from multiple views.measure the status quo of the industry’s intra-industry index.Overall,theindustry’s intra-industry trade index is relatively high,differs significantly with the major trading partners.andthe vertical intra-industry trade index accounts for a large part of the intra-industry index,refleting theindustry are in the low value links of the world,and the product benefits ability is low.The empirical part of the research can be divided into two points.one, according to the classical theoryand related literature, after the process of been tested, using the fixed effects model based on the Eviews6.0,constructed a panel data model including the capital stock per capita, per capita income, R&D investment,exchange rates and foreign direct investment indicator and so on. Second, the tools of stationary test, errorcorrection model and impulse response, variance decomposition analysis to analyze FDI and intra-industrytrade relationship.Since the selected trading partners based on the absolute trade volume,they are just ten of therepresentive partners in this paper. which are mostly developed countries, the regression results showes that:(1) Factors relevant to the production capacity, such as the per capita expenditure on education,per capitacapital stock, R&D expenditures have negative infulence on the total intra-industry trade index and thehorizonal intra-industry trade index,howere have positive effect on the vertical impact of intra-industry tradeindex. Meet the F-K model theory predicts.(2) demand factors, such as per capita GDP positively impactsthe intra-industry trade index, in line with Linder’s demand theory,otherwise,the inpact on the horrizonalintra-industry is negative, which was related to the hipothesis of the theory and country conditions.(3) external factors, the impact of trade openness and the effective exchange rate is not so obvious.(4) FDIinfuence on the overall intra-industry trade index in a complex dynamic way,indicates the motive of foreigndirect investment was diversified; the inpact on the horizonal intra-industry trade was significant, besides,theforce has gradually increased over time, while the effect on vertical-industry trade impact is not significant.Finally, based on empirical analysis of this paper,a few of countermeasures and suggestions was put forward.