The Research Of The Encouragement Policy Of Foreign Direct Investment And Its Effect On Productivity

Since the reform and open door policy, China has been introducing the foreign capital,at the same time, expanding the foreign direct investment, especially since 2004 when China putted forward “Going Out” strategy, China’s foreign direct investment enterprises increased significantly. “Decision of the Central Committee of the Communist Party of China(CCCPC) on Some Major Issues Concerning Comprehensively Deeping the Reform” adopted at the Third Plenary Session of the 18 th CCCPC, proposed that “We will expand both enterprise and individual investment overseas, establish themselves as foreign-investment entities,allow them to exploit their advantages in overseas investment cooperation.”China became the net foreign investment country firstly, and Chinese economic had entered a “New Normal”. Foreign direct investment has become the inevitable requirement for Chinese enterprises take use the domestic and foreign markets and two kinds of resources to participate the international division and economic globalization. The research of the encouragement policy of foreign direct investment and its effect on productivity related to the improvement of enterprises’ international competitiveness and the status in the global value chain, the formulate and adjust the policy, and the research conclusion can provide specific guidance for the practice enterprises investment practice and has a high theoretical and practical value.This paper choose “foreign direct investment country and industry oriented catalog”(referred to as “Guidance Catalog”) to research the effect of the encouragement policy of foreign direct investment on enterprises’ productivity. This paper is to answer the following questions: first, whether “Guidance Catalog” promote foreign direct investment effectively? Second, if it is, there are differences between the effect of investment by contrasting the behavior of foreign direct investment with policy driven and non policy driven? Third, if it is, what is the main reason causing the difference of policy driven and non policy driven foreign direct investment?The research uses the regression discontinuity and propensity score matching value method, the conclusions of this study are as follows: firstly, the empirical research using the regression discontinuity shows that the "Guiding Catalog" has a positive and significant impact on foreign direct investment; Secondly, the empirical research using propensity score matching value method based on double difference shows that the technology seeking foreign direct investment with non policy driven can significantly promote enterprise productivity contrast to the policy driven; the market seeking foreign direct investment with policy driven can significantly promote enterprise productivity contrast to the non policy driven. Finally, the analysis results of the average treatment effect based on the data of the treatment group and control group before and after propensity score matching value method shows that the technology seeking foreign direct investment with non policy driven can significantly promote enterprise productivity, and the market seeking foreign direct investment with policy driven can significantly promote enterprise productivity.This study consists of five chapters. The fist chapter is introduction, which introduces the background and significance of research, basic concept definition, literature review,analytical framework and methods, and the innovative points and shortcomings. The second part is theoretical analysis, which reviews the main existing theories of developedand developing countries. The review of foreign direct investment provide strong support to this study in the theoretical basis, research framework and background. The third part is analysis of the current situation of Chinese foreign direct investment from the overall scale,location, industry distribution, entry modes and investment subject, and analysis the encouragement policy of China’s foreign direct investment from the overall level and the different types of investment, and strive to grasp the evolution and the overall characteristic of Chinese foreign direct investment, in order to provide the practical basis of research on mechanism that the effect of the encouragement policy of foreign direct investment on enterprises’ productivity. The fourth part is empirical analysis, the analysis is divided into three steps, the first step is the empirical analysis of the effect of the encouragement policy of foreign direct investment on enterprises’ productivity. The second step is the analysis of productivity effect of policy driven and non policy driven enterprises. The third part is analysis of the main reasons causing the differences of productivity effect of policy driven and non policy driven enterprises. The fifth part is the conclusion and policy recommendations. This part makes a systematic summary and put forward the corresponding suggestions.