The Effect Of Taiwan Direct Investment On Manufacturing In Jiangsu Province

Since the reform and opening up in 1979,China has successfully attracted a large number of overseas businessmen to enter the mainland China by virtue of its vast land,cheap labor,abundant natural resources and preferential tax policies.Foreign invest-ment is one of the indispensable factors in the process of China's economic develop-ment.In order to further promote the development of cross-strait relations and eco-nomic and trade exchanges,China implemented a series of preferential policies and relevant laws and regulations.These measures as well successfully attracted a great number of Taiwanese businessmen to invest in mainland China.From 1991 to 2015,the mainland China is the highest proportion of direct investment area from Taiwan,accounting for 61.4%,of which the highest proportion of investment to Jiangsu,and the proportion of investment in the manufacturing sector has remained at more than 80%.This paper combines qualitative and quantitative analysis methods to research the impact of Taiwanese Direct Investment in manufacturing industry in Jiangsu province.First of all,through the previous research and theory shows the influence of overseas direct investment on local manufacturing technology,and discusses the history of Tai-wanese investment in manufacturing industry in Jiangsu,the basic situation and driving factors of manufacturing industry.Then using the panel data regression analysis to ex-amine the progress from Taiwanese investment in manufacturing industry in Jiangsu,the influence of technology spillover and employment,I obtain the following conclu-sions.(1)Taiwanese direct investment promoted the growth of the manufacturing in-dustry in Jiangsu,but the total investment accounted for a small share of all overseas investment.Therefore,the effect of Taiwanese direct investment in Jiangsu was obvi-ously small when compared with that in whole mainland China.(2)Because of the Taiwan regulations,all investments in the manufacturing sec-tor in mainland China are subject to restrictions on the scale and technology.Core tech-nology and R&D department are limited in Taiwan Honjima Uchi.Currently in Jiangsu most of the manufacturers are in the field of assembling,processing and industrial tech-nology of next generation.Although there is technology spillover to Jiangsu manufac-turing industry,the contribution of technology spillover is small.(3)In Jiangsu Taiwanese businessmen invested mainly in capital intensive and labor-intensive electronic manufacturing industry.In consideration of the production cost burden,they employed general staff directly from locals excluding the manage-ment executives and core technical staff;thus the local employment rate in Jiangsu was improved.Finally,according to the conclusions of this paper I suggest that the improvement of cross-strait relations.In addition,my suggestions for both Jiangsu and Taiwan are as in the following.Jiangsu should continue to introduce and expand Taiwanese invest-ment scale,to offer preferential policies,and to upgrade the technical skills of the local manufacturers.Taiwan should reduce restrictions on technology investment in the man-ufacturing sector to mainland China,and encourage high-tech personnel to develop career in mainland China.Furthermore,to combine individual advantages of both sides,China and Taiwan can play an important role in the global market.