An Analysis Of FDI Impacts On Agglomeration Of Equipment Manufacturing Industry

With economic globalization making the connection closer between the countries all over the world,capital flows more frequently between countries.As an important way for multinational companies to carry out global strategy,foreign direct investment is becoming more and more important in global economic development.For host countries.FDI can bring capital,advanced ideas and technology,help improve the asset quality and labor productivity.This can accelerate the economic development and promote optimization and upgrading of industrial structure of host countries,and in further enhance its industry competitiveness.In the framework of new economic geography,industrial agglomeration combines space with economy and is getting more and more attention.Industrial agglomeration has an obvious effect on a country's economic development.It can help form scale economy agglomeration effect,lower the production cost of the cluster industry,and enhance competitiveness of a country.With the globalization of the economy,multinational companies bring capital to all corners of the world by means of trade and investment.which has a great influence on the industrial distribution in many countries and makes industry agglomeration begin to appear in different countries.Industrial agglomeration is crucial to a country's economic development,therefore,both economic scholars,economic organizations and the government pay more and more attention to the impact of economic globalization and regional economic integration on industry agglomeration.As a national industrial backbone and the leading force of industrialization and modernization,equipment manufacturing industry is playing a more and more important role in the ascension of the national comprehensive strength and getting more and more attention from scholars all over the world.Therefore,under the background of economic globalization,studying the FDI effect on agglomeration of equipment manufacturing industry is very necessary.Shandong Province made an important contribution in the national economic growth.According to the statistical bulletin for national economic and social development of Shandong Province,Shandong Province created GDP of 6.30023 trillion RMB in 2015,which increased by 8%than last year when calculated at comparable prices and accounted for 9.31%of the GDP in China,ranking third in all the provinces of China.In recent years,the competitiveness of equipment manufacturing industry in Shandong Province has achieved a big improvement,but there is still a big gap when compared to Jiangsu and Guangdong and other provinces.Since reform and opening up,Shandong Province have started to introduce FDI and the total cumulative FDI increased continuously.Especially after China became one member of WTO,Shandong Province took actions from a strategic height and took the use of FDI as one of the "three highlights" work,making the quantity of FDI in Shandong Province increase sharply.In 2014,the actual FDI amount in Shandong Province is $15.195 billion,which increased by 8.1%on a year-on-year basis,higher than the national growth 1.7%.Although the FDI amount of equipment manufacturing industry in Shandong Province keeps growing these years,there are still some problems when it comes to the use of FDI,which hinders the improvement of industry agglomeration for the equipment manufacturing industry and in further hinders the improvement of equipment manufacturing industry's competitiveness.Therefore,based on the analysis of equipment manufacturing industry cluster,this paper is aimed to put forward suggestions in terms of rational utilization of FDI to promote the agglomeration of equipment manufacturing industry and in further promote the competitiveness of the equipment manufacturing industry,which will help promote the upgrading of industrial structure and economic transformation in Shandong Province.The first chapter introduces the topic selection background and research significance,generalizes the research status of industrial agglomeration at home and abroad,and points out the research method,innovation points and deficiencies of this paper.The second chapter introduces the related concepts,theoretical basis and analyzes the mechanism of FDI effect on industrial agglomeration.The third chapter firstly introduces the characteristics of FDI in Shandong Province,and then analyzes the current situation of the equipment manufacturing industry's development,the current situation and the insufficiency in the use of FDI in Shandong Province,as well as describes the status of equipment manufacturing industry cluster in Shandong Province by means of Industrial Cluster Coefficient.The fourth chapter is the key chapter of this article,it conducts empirical test on the effect of the core variable FDI and the relevant control variables on equipment manufacturing industrial cluster in Shandong Province by building a panel model.The fifth chapter summarizes the research contents and conclusions,and puts forward relevant suggestions in terms of how to make better use of FDI in Shandong Province.There are two main innovative points in this paper.Firstly,the research topic in this paper is the agglomeration of equipment manufacturing industry in Shandong Province,which hasn't been studied before and thus it fills the blank in the research of equipment manufacturing industry agglomeration in Shandong Province.Secondly,this paper adopts panel model and includes all equipment manufacturing industry,thus it overcomes the drawback of time series model that only includes time dimension.While selecting FDI as the core independent variable,it selects the relevant control variables from the perspective of new classical economics,new economic geography economics and institutional factors,so that we can avoid the error resulting from single independent variable model and ensure the accuracy of the regression results as far as possible.