The Mechanism And Effect Of Home-Country's Financial Development Influenced By The OFDI

Outward foreign direct investment(OFDI)is the main economic participation of acountry or region in international competition.In recent years,the worldwide influence of the OFDI enterprises in our country is increasing,and it has been gradually becoming a new growth point of China's foreign trade development.For a long time,financial development has been regarded as the lubricant for promoting OFDI.However,in fact,OFDI is also counterproductive to the financial development of the motherland.Therefore,the structurally unbalance financial resources and low efficiency finance under the deepening market economy system in China has been gradually becoming an important factor inhibiting growth of financial development.This paper has a certain theoretical and practical significance by studying the mechanism and effect of how OFDI affecting China's financial development.This paper based on the existing related research,analysing the mechanism of OFDI promoting the financial development of investing country from dual paths.Specifically,OFDI of can through original effect path and the reverse technological overflow effect path.Original effect means OFDI itself can push the financial development of investing country.Reverse technological overflow effect is mainly presented as the technological innovation,which is brought by the reverse effect,and the economic growth brought by the innovation can result in the financial development of the investing country.Furthermore,this paper carries on the analysis on the current situation of China's OFDI and financial development through the statistical description method,focuses on the relationship between OFDI and financial development.In addition,the dynamic panel data during 2003 and 2014 of 30 provinces of China were selected to conduct empirical analysis and robustness test against the national whole sample,the eastern and western regions grouping sub sample.The results show that the effect of foreign direct investment through its original path and the reverse technological overflow effect directly force financial development of our country,but the reverse technological overflow effect failed to give full play to the role of financial development.Simultaneously,the level of China's economic development have a positive impact on financial development;in addition,the effect of the economical open level in the eastern region on financial development is not significant.However,the opening degree of the middle and western regional has significantly inhibited the development of finance.And the level of human capital has had negative effects on financial development in the whole country,the eastern and the mid-western regions.Finally,combining with theoretical analysis and empirical test,policy recommendations are presented in terms of the use of foreign direct investment in our country in enhancing the level of financial development.Firstly,guiding the further development of OFDI actively.Second is improve the effect of OFDI reverse technological overflow on technological innovation.Furthermore,paying attention to the improvement of economic intrinsic quality.Fourth is guard against the impact of international financial market on China's financial market.Finally,the governance should promote the regional distribution and coordination of human capital.