Research On The Impact Of China's Outward Foreign Direct Investment On The Upgrading Of Domestic Industrial Structure

Since the reform and opening-up of China,the fruits of economic development attracts worldwide attention,international capital flows have also become more frequent,From "bringing in" to "going out",outward foreign direct investment in China has developed rapidly,ascending the world's third-largest investment country.By the end of 2015,the total stock of OFDI in China surpassing the trillion-dollar mark for the first time,achieving sustained growth for 13 consecutive years.Meanwhile,China's economic development into the new normal state requires steady growth restructuring.Also,the upgrading of domestic industries remained slow and inefficient,China is still at the bottom of the international industrial value chain,there are both intrinsic motivation and external pressure which require us to optimize domestic industrial structure.How to take the advantage of booming OFDI to promote the upgrading of industrial structure in China,which has an important theoretical and practical significance.Numerous previous studies pay attention to the effects of OFDI on host country's industrial structure,and is largely based on the experience of developed countries,lack of systematic analysis of developing country's OFDI influence on domestic industrial structure upgrading,especially short of related research on China.Therefore,this paper comparatively analyze relevant theoretical and empirical research results from both Chinese and foreign scholars,and take OFDI in China as research object,from macro to micro perspective,theoretically analyze its effect and drive mechanism on domestic industrial structure.Considering realities in China,this paper bring multiple variables including OFDI,per capita GDP,fixed assets investment,import and export trade,research and development expenditure into model,striving to make the analysis more comprehensive.Besides,the empirical tests cover not only national time series data,but also panel data analysis of eastern typical ten provinces,making research results more persuasive.In the first part,this paper reviews relevant theories,scholars at home and abroad respectively take advanced economies and underdeveloped economies as their research objects,mostly believe that OFDI has a positive impact on domestic industrial structure,but some proposed negative effects such as "industrial hollowing" theory.The second part is about the scale,industrial and locational selections of China's OFDI,as well as characteristics and some serious contradictions of domestic industrial structure.The third part of this paper defines related conceptions,then analyze effects and drive mechanisms separately from macro level to micro view.Macroscopically,through the effect of marginal industry transfer,industrial correlation and intra-industry competition to influence the optimization and upgrading of domestic industrial structure.From another aspect,micro enterprises invest overseas for the sake of seeking resources,marketing,efficiency and strategic resources,each plays a driving role on the upgrading of domestic industrial structure.The fourth empirical part first introduces Hollis B.Chenery's "classic structure growth" model,builds an index to measure the upgrading of industrial structure,and according to actual conditions in China,takes relevant variables which may affect industrial upgrading into account.Then builds a VAR model according to 1992-2014 national time sequence data,through pulse response analysis and variance decomposition test to find out whether China's OFDI can promote upgrading of domestic industrial structure,and the strength of effect.Futhermore,according to the OFDI stock ranking by the end of 2014 chooses the top ten eastern typical provinces,uses their 2003-2014 provincial panel data for key regression analysis.Through both national and eastern typical provincial data test,the empirical results shows that China's OFDI has significant positive effects on upgrading of domestic industrial structure,and as time goes by,the effect gradually strengthening and stabilizing,but compared to the effects of other factors such as AGDP and INV,the impact of OFDI is small and there is a certain lag,which is mainly because OFDI in China has started late and the scale is small.The last part is conclusion and policy recommendations,summarize all of the theory and empirical conclusions in this paper,put forward that our government should reform system,provide policy and legal support,improve the quality and quantity of OFDI and guide transnational corporations of industrial and locational selections,promote investment diversification,encourage internationalization of domestic enterprises to enhance the optimizational effect of OFDI on domestic industrial structure.