The Research Of The Impact Of Financial Openness On The Upgrading Of Industrial Structure

As the developing of economic globalization, the links among different countries tend to be closer and closer. Therefore financial liberalization has become an irreversible trend. However,as to the study of benefit of financial openness, the existing literature mainly focuses on the relationship between financial liberalization and economic growth, instead of the relationship between financial openness and the upgrade of the industrial structure. Industrial structure theory and the experience of developed countries show that, to some extent, financial openness has a positive effect on the upgrade of industrial structure. In some developing countries,however, financial liberalization policy leads to severe economic shocks and the loss of industrial efficiency, which shows the uncertainty of financial openness’ impact on the industrial structure upgrade.This paper elaborates the mechanism of financial openness’ impact on the industrial structure upgrading from the following four aspects: introduce incremental capital, lower capital costs, improve efficiency of resource allocation and strengthening of international division. And then using the 1991-2012 years, more than 50 countries multinational panel data and the panel threshold model to empirical test the threshold effect of financial openness on upgrading industrial structure. It was found that, overall, the impact of financial liberalization on upgrading industrial structure is positive, but with changes in the economic and financial basic conditions, there is the effect of two important turning point. Every turning point in each cross, the effect becomes more obvious, namely the existence of threshold effects. As of 2013,China’s per capita GDP is still lower than the first threshold value, but the degree of financial development has crossed the first threshold. So from the industrial structure upgrading in terms of efficiency, China can speed up financial liberalization moderately, but should grasp the timing and note the order of openness.