Analysis Of The Effects Mechanism Of Two-way FDI On Value Chain Upgrading Of Chinese And Empirical Research

From 2002, our country stress that we should develop the IFDI and OFDI together to promote industrial upgrading. On the basis of stable IFDI scale, our country develop OFDI rapidly. At present, China has the dual identity of the host country and investor. However, the results showed that our country is still in the low-end link of GVC. And the theory and practice studies have showed that IFDI and OFDI’s influence on the value chain upgrade has both positive and negative. The economic development of our country is faced with complex international and domestic environment, how to coordinate the development of IFDI and OFDI to improve our position in the global value chain is the important problem to be solved. And through the carding of ancestors related literature, we found that researches about the effects of two-way FDI on the value chain upgrading are rare. So this article will put the effects of IFDI and OFDI on the value chain upgrading into the same framework to analyze the linkage effect between of them.First, we rearraged the related literature at home and abroad. And based on the review of the related literature, we find that most of the existing literature is a separate study of the effects of IFDI or OFDI on the value chain upgrading. But, from the perspective of value chain upgrading, and the research of combination the two-way FDI is rare.Second, through analysis the development current situation of IFDI and OFDI, and our country’s status in GVC, we find that they have close relationship between them. So, we need to discuss their inner mechanism.From IFDI the inner mechanism of the impact on the value chain upgrade analysis, we show that the impact of IFDI on value chain upgrading has both advantages and disadvantages. At the same time, the impact of OFDI on value chain upgrading also has both advantages and disadvantages. Finally, we analyze the inner mechanism of the impact of two-way FDI on value chain upgrading. The results show that the effect of IFDI and OFDI on value chain upgrading has both promoted each other and restrain each other. On the one hand, they promote each other function main performance for two kinds of situations: 1.The mutual reinforcement of positive effect, IFDI can contribute to the performance of the positive effect of OFDI. Also, OFDI can contribute to the performance of the positive effect of IFDI. 2. The mutual weakening of negative effect, IFDI can prevent industrial hollowing out phenomenon caused by OFDI. Also OFDO can prevent the phenomenon of redundant construction caused by IFDI; on the other hand, they restrict each other function main performance for two kinds of situations:1. The mutual weakening of positive effect, IFDI is unfavorable of the performance of the positive effect of OFDI. Also, OFDI is unfavorable of the performance of the positive effect of IFDI. 2. The mutual reinforcement of negative effect, IFDI can worsen industrial hollowing out phenomenon caused by OFDI. Also, OFDI will deteriorate industries redundant construction phenomenon.Two-way FDI impact on the value chain upgrade in China of the empirical analysis shows that IFDI and OFDI have different degrees of promoting effect to the value chain to upgrade. However, this effect is mutual inhibition between them, and this result shows that our country’s IFDI doesn’t go well with the development of OFDI. Therefore, we should, from the government and enterprise two angles, take measures to make IFDI and OFDI coordination development in order to improve our position in the global value chain to make greater contribution.Finally, based on mechanism analysis and empirical test, we give some suggestions to the development of two-way FDI. Such as we should combine the development of two-way FDI and value chain upgrading, cultivate the consciousness of competition and value chain upgrading, and so on.