Research On The Impact Of Foreign Direct Investment On The Industrial Upgrading Of Manufacturing Industry In Shandong Province

Since the policy of reform and opening up, in order to promote the economy of the whole province, Shandong Province introduced a large number of foreign direct investment(FDI). Among them, manufacturing industry occupying a large proportion, and the positive or negative effects are inevitable to the development and upgrading process. Over the past thirty years, can FDI promote the economic development of Shandong province and upgrade the manufacturing industry? How to make further efforts to promote the upgrading, improve the efficiency of resource allocation, carry forward the optimization of industrial structure by using FDI in this new economic situation?To analyze these problems, this paper is based on the theory of industrial upgrading and the foreign direct investment, will reveal the mechanism that FDI act upon the industrial upgrading, and whether there existing any positive or negative effects.This paper mainly cover two aspects:the optimization of the industrial structure and the improvement of efficiency.To explore the function of FDI on manufacturing industry in Shandong Province,through analysis the status of manufacturing industry development and the utilization of Foreign-funded, the paper finally tested on the industrial level. From the point of structural optimization to view the role of FDI, using distributed lag model, unit root test, co integration test and Granger causality test, by correlation analysis,discussed the relation between the growth of manufacturing sector, the development of heavy industrialization, the development of high technology industry and the inflow of FDI. The results showed as follows:(1) the inflow of FDI has a positive effect in promoting the GDP in Shandong province. This effect fades as years roll on.(2) FDI promoted the development of Heavy Chemical Industry and High-tech industry, and led the transition to the advancement in heavy industry and technology intensive industry.According to the existing problems by using the FDI, this paper proposed the to idea of getting rid of the excessive dependence on foreign capital to promote the transformation of "Made in Shandong " to "Created in Shangdong", to achieve the transformation and upgrading.